UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM10-Q

(Mark one):

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

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, ~~2017~~2020

☐	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.)
~~Fat-the~~
1521 WESTBRANCH DRIVE, SUITE 100 MCLEAN, VIRGINIA		22102

(Address of principal executive office)		(Zip Code)

(703)287-5800

(Registrant’s telephone number, including area code)

Not Applicable

(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 Global Stock Market LLC

5.375% Notes due 2024, $25.00 par value per note	GLADL	The Nasdaq Global Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-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 Rule12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒ ☐

Non-accelerated filer	~~☐ (Do not check if a smaller reporting company)~~☒	Smaller reporting company	☐

		Emerging growth company	☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the issuer’s common stock, $0.001 par value per share, outstanding as of February 2, ~~2018~~2020 was ~~26,632,182.~~32,490,392.

GLADSTONE CAPITAL CORPORATION

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Assets and Liabilities as of December 31, ~~2017~~2020 and September 30, ~~2017~~2020	2
	Consolidated Statements of Operations for the three months ended December 31, ~~2017~~2020 and ~~2016~~2019	3
	Consolidated Statements of Changes in Net Assets for the three months ended December 31, ~~2017~~2020 and ~~2016~~2019	5
	Consolidated Statements of Cash Flows for the three months ended December 31, ~~2017~~2020 and ~~2016~~2019	6
	Consolidated Schedules of Investments as of December 31, ~~2017~~2020 and September 30, ~~2017~~2020	7
	Notes to Consolidated Financial Statements	1719

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
	Overview	39
	Results of Operations	4243
	Liquidity and Capital Resources	47

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5354

Item 4.	Controls and Procedures	53

~~PART II.~~	~~OTHER INFORMATION~~

~~Item 1.~~	~~Legal Proceedings~~	54

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	55

Item 1A.	Risk Factors	5455

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5456

Item 3.	Defaults Upon Senior Securities	5456

Item 4.	Mine Safety Disclosures	5456

Item 5.	Other Information	5456

Item 6.	Exhibits	5557

SIGNATURES		5658

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)


							December 31,			September 30,
	December 31, 2017			September 30, 2017			2020			2020
ASSETS
Investments, at fair value:
Non-Control/Non-Affiliate investments (Cost of$357,481and $318,952, respectively)	$	330,297		$	290,860
Affiliate investments (Cost of$50,036and $49,868, respectively)		43,856			42,648
Control investments (Cost of$42,615 and $42,615 respectively)		18,277			18,865
Non-Control/Non-Affiliate investments (Cost of $411,458 and $427,798, respectively)							$	392,594		$	401,047
Affiliate investments (Cost of $48,322 and $38,322, respectively)								43,084			33,179
Control investments (Cost of $28,331 and $28,527, respectively)								16,681			16,174
Cash and cash equivalents		4,503			5,012			1,464			2,420
Restricted cash and cash equivalents		228			258			90			49
Interest receivable, net		2,167			1,699			2,129			3,001
Due from custodian		7,418			3,086
Deferred financing fees		668			853
Due from administrative agent								2,357			2,103
Deferred financing costs, net								360			372
Other assets, net		2,308			2,579			647			832

TOTAL ASSETS	$	409,722		$	365,860		$	459,406		$	459,177

LIABILITIES
Borrowings, at fair value (Cost of$130,500 and $93,000, respectively)	$	130,833		$	93,115
Mandatorily redeemable preferred stock, $0.001 par value per share, $25 liquidation preference per share;5,440,000 and 5,440,000 shares authorized, respectively, and2,070,000 and 2,070,000 shares issued and outstanding, respectively		49,870			49,849
Borrowings, at fair value (Cost of $16,300 and $128,000, respectively)							$	16,270		$	127,650
Notes payable, net of unamortized deferred financing costs of $4,527 and $2,428, respectively								191,786			93,885
Accounts payable and accrued expenses		511			522			600			377
Interest payable		330			264			1,336			1,181
Fees due to Adviser^(A)		1,291			1,292			1,710			1,686
Fee due to Administrator^(A)		272			244			434			329
Other liabilities		898			924			153			326

TOTAL LIABILITIES	$	184,005		$	146,210		$	212,289		$	225,434

Commitments and contingencies^(B)
NET ASSETS
Common stock, $0.001 par value,44,560,000 and 44,560,000 shares authorized, respectively, and26,632,182and26,160,684 shares issued and outstanding, respectively	$	27		$	26
Common stock, $0.001 par value per share, 44,560,000 and 44,560,000 shares authorized, respectively, and 32,490,392 and 31,566,850 shares issued and outstanding, respectively							$	33		$	32
Capital in excess of par value		352,540			348,248			374,296			367,125
Cumulative net unrealized depreciation of investments		(57,702	)		(59,062	)		(35,752	)		(44,247	)
Cumulative net unrealized depreciation of other		(333	)		(115	)
Cumulative net unrealized appreciation of other								30			350
Over distributed net investment income		(207	)		(139	)		(59	)		(39	)
Accumulated net realized losses		(68,608	)		(69,308	)		(91,431	)		(89,478	)

Total distributable loss								(127,212	)		(133,414	)

TOTAL NET ASSETS	$	225,717		$	219,650		$	247,117		$	233,743

NET ASSET VALUE PER COMMON SHARE	$	8.48		$	8.40		$	7.61		$	7.40

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

^(B)	Refer to Note 10—Commitments and Contingencies in the accompanyingNotes 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)

(UNAUDITED)


	Three Months Ended December 31,						Three Months Ended December 31,
	2017			2016			2020			2019
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate investments	$	7,684		$	5,809		$	10,222		$	9,648
Affiliate investments		1,111			1,162			910			1,046
Control investments		687			445			415			422
Cash and cash equivalents		12			2			—			8

Total interest income (excluding PIK interest income)		9,494			7,418			11,547			11,124
PIK interest income
Non-Control/Non-Affiliate investments		1,106			997			535			332
Affiliate investments		70			218

Total PIK interest income		1,176			1,215			535			332
Total interest income		10,670			8,633			12,082			11,456
Success fee income
Dividend income
Non-Control/Non-Affiliate investments		—			391			366			164
Affiliate investments		—			1,142
Control investments								222			186

Total success fee income		—			1,533
Total dividend income								588			350
Other income		189			(192	)		212			353

Total investment income		10,859			9,974			12,882			12,159

EXPENSES
Base management fee^(A)		1,676			1,378			2,002			1,852
Loan servicing fee^(A)		1,186			983			1,348			1,403
Incentive fee^(A)		1,373			1,293			1,367			1,394
Administration fee^(A)		272			300			355			371
Interest expense on borrowings		1,231			556
Dividend expense on mandatorily redeemable preferred stock		776			1,029
Amortization of deferred financing fees		248			273
Interest expense on borrowings and notes payable								2,568			2,537
Dividends on mandatorily redeemable preferred stock								—			9
Amortization of deferred financing costs								418			361
Professional fees		255			236			218			185
Other general and administrative expenses		292			401			324			346

Expenses, before credits from Adviser		7,309			6,449
Expenses before credits from Adviser								8,600			8,458
Credit to base management fee - loan servicing fee^(A)		(1,186	)		(983	)		(1,348	)		(1,403	)
Credit to fees from Adviser - other^(A)		(841	)		(699	)		(650	)		(1,313	)

Total expenses, net of credits		5,282			4,767			6,602			5,742

NET INVESTMENT INCOME		5,577			5,207			6,280			6,417


NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized (loss) gain:
Net realized gain (loss):
Non-Control/Non-Affiliate investments		602			3,882			(2,143	)		(4,434	)
Affiliate investments		—			(2,330	)
Control investments		(28	)		(5,000	)		(1	)		—
Other		(133	)		—			(8	)		(1,407	)

Total net realized gain (loss)		441			(3,448	)		(2,152	)		(5,841	)
Net unrealized appreciation (depreciation):
Non-Control/Non-Affiliate investments		908			(5,867	)		7,887			2,742
Affiliate investments		1,040			706			(95	)		(140	)
Control investments		(588	)		4,106			703			(2,463	)
Other		(218	)		212			(320	)		(17	)

Total net unrealized appreciation (depreciation)		1,142			(843	)		8,175			122

Net realized and unrealized gain (loss)		1,583			(4,291	)		6,023			(5,719	)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	7,160		$	916
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS							$	12,303		$	698

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)

BASIC AND DILUTED PER COMMON SHARE:

Net investment income
   $ 0.21    $ 0.21




Net increase in net assets resulting from operations
   $ 0.27    $ 0.04




Distributions declared and paid per common share
   $ 0.21    $ 0.21




WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:Basic and Diluted
   26,522,788    24,778,970


BASIC AND DILUTED PER COMMON SHARE:
Net investment income	$	0.20	$	0.21

Net increase (decrease) in net assets resulting from operations	$	0.38	$	0.02

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic and Diluted		32,097,542		30,513,530

^(A)	Refer to Note 4—Related Party Transactions in the accompanyingNotes 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

(IN THOUSANDS)

(UNAUDITED)


	Three Months Ended December 31,						2020			2019
	2017			2016
NET ASSETS, SEPTEMBER 30							$	233,743		$	249,330
OPERATIONS
Net investment income	$	5,577		$	5,207			6,280			6,417
Net realized gain (loss) on investments		574			(3,448	)		(2,144	)		(4,434	)
Realized loss on other		(133	)		—
Realized gain (loss) on other								(8	)		(1,407	)
Net unrealized appreciation (depreciation) of investments		1,360			(1,055	)		8,495			139
Net unrealized (depreciation) appreciation of other		(218	)		212
Net unrealized depreciation (appreciation) of other								(320	)		(17	)

Net increase in net assets resulting from operations		7,160			916
Net increase (decrease) in net assets resulting from operations								12,303			698

DISTRIBUTIONS
Distributions to common stockholders from net investment income		(5,577	)		(5,207	)
Distributions to common stockholders from net investment income ($0.19 per share and $0.21 per share, respectively)^(A)								(6,100	)		(6,417	)
Distributions to common stockholders from return of capital ($0.01 per share and $0.00 per share, respectively)^(A)								(180	)		—

Net decrease in net assets from distributions		(5,577	)		(5,207	)		(6,280	)		(6,417	)

CAPITAL TRANSACTIONS
Issuance of common stock		4,567			17,344			7,491			7,315
Discounts, commissions and offering costs for issuance of common stock		(83	)		(875	)		(140	)		(137	)

Net increase in net assets resulting from capital transactions		4,484			16,469
Net increase (decrease) in net assets resulting from capital transactions								7,351			7,178
NET INCREASE (DECREASE) IN NET ASSETS								13,374			1,459

NET INCREASE IN NET ASSETS		6,067			12,178
NET ASSETS, BEGINNING OF PERIOD		219,650			201,207
NET ASSETS, DECEMBER 31							$	247,117		$	250,789

NET ASSETS, END OF PERIOD	$	225,717		$	213,385

(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

(IN THOUSANDS)

(UNAUDITED)

   Three Months Ended
December 31,
   2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES

Net increase in net assets resulting from operations
   $ 7,160 $ 916
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:

Purchase of investments
   (56,938 ) (20,047 )
Principal repayments on investments
   18,569 42,234
Net proceeds from sale of investments
   1,274 8,219
Increase in investments due topaid-in-kind interest or other
   (983 ) (1,095 )
Net change in premiums, discounts and amortization
   (45 ) 54
Net realized (gain) loss on investments
   (574 ) 3,448
Net unrealized (appreciation) depreciation of investments
   (1,360 ) 1,055
Net unrealized appreciation (depreciation) of other
   218 (213 )
Changes in assets and liabilities:

Decrease in restricted cash and cash equivalents
   30 355
Amortization of deferred financing fees
   248 273
(Increase) decrease in interest receivable, net
   (468 ) 380
Increase in due from custodian
   (4,332 ) (779 )
Decrease (increase) in other assets, net
   256 (3,495 )
Decrease in accounts payable and accrued expenses
   (11 ) (405 )
Increase (decrease) in interest payable
   66 (91 )
Decrease in fees due to Adviser^(A)
   (1 ) (11 )
Increase in fee due to Administrator^(A)
   28 18
(Decrease) increase in other liabilities
   (26 ) 650


Net cash (used in) provided by operating activities
   (36,889 ) 31,466


CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings
   61,100 24,200
Repayments on borrowings
   (23,600 ) (67,300 )
Deferred financing fees
   (42 ) —
Proceeds from issuance of common stock
   4,567 17,344
Discounts, commissions and offering costs for issuance of common stock
   (68 ) (875 )
Distributions paid to common stockholders
   (5,577 ) (5,207 )


Net cash provided by (used in) financing activities
   36,380 (31,838 )


NET DECREASE IN CASH AND CASH EQUIVALENTS
   (509 ) (372 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
   5,012 6,152


CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 4,503 $ 5,780


		Three Months Ended December 31,
		2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets resulting from operations		$	12,303		$	698
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchase of investments			(29,098	)		(42,535	)
Principal repayments on investments			30,631			12,656
Net proceeds from sale of investments			3,511			(25	)
Increase in investments due to PIK interest			(654	)		(328	)
Net change in premiums, discounts and amortization			2			(196	)
Net realized loss (gain) on investments			2,144			4,434
Net realized loss (gain) on other			8			1,407
Net unrealized depreciation (appreciation) of investments			(8,495	)		(139	)
Net unrealized appreciation (depreciation) of other			320			17
Changes in assets and liabilities:
Amortization of deferred financing fees			418			361
Decrease (increase) in interest receivable, net			872			(279	)
Decrease (increase) in funds due from administrative agent			(254	)		(347	)
Decrease (increase) in other assets, net			157			(123	)
Increase (decrease) in accounts payable and accrued expenses			223			84
Increase (decrease) in interest payable			155			395
Increase (decrease) in fees due to Adviser^(A)			24			(582	)
Increase (decrease) in fees due to Administrator^(A)			105			104
Increase (decrease) in other liabilities			(173	)		85

Net cash provided by (used in) operating activities			12,199			(24,313	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit			21,500			84,300
Repayments on line of credit			(133,200	)		(60,400	)
Redemption of preferred stock			—			(51,750	)
Proceeds from issuance of long-term debt			100,000			38,813
Deferred financing fees			(2,513	)		(1,383	)
Proceeds from issuance of common stock			7,491			7,315
Discounts, commissions and offering costs for issuance of common stock			(112	)		(112	)
Distributions paid to common stockholders			(6,280	)		(6,417	)

Net cash provided by (used in) financing activities			(13,114	)		10,366

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS			(915	)		(13,947	)
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD			2,469			15,748

CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD	��	$	1,554		$	1,801

CASH PAID FOR INTEREST		$	2,413		$	2,142

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

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

DECEMBER 31, ~~2017~~2020

(UNAUDITED)

(DOLLAR AMOUNTS IN THOUSANDS)

~~(UNAUDITED)~~


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)		Cost		Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS^(M) – 158.9%
Secured First Lien Debt – 80.3%
Aerospace and Defense – 5.0%
Antenna Research Associates, Inc. – Term Debt (L + 10.0%, 12.0% Cash, 4.0% PIK, Due 11/2023)^(E)	$	12,411	$	12,411	$	12,411

Beverage, Food, and Tobacco – 10.4%
Café Zupas – Line of Credit, $4,000 available (L + 7.4%, 8.9% Cash, Due 12/2024)^(C)		—		—		—
Café Zupas – Delayed Draw Term Loan, $3,030 available (L + 7.4%, 8.9% Cash, Due 12/2024)^(C)		1,970		1,970		1,955
Café Zupas – Term Debt (L + 7.4%, 8.9% Cash, Due 12/2024)^(C)		24,000		24,000		23,820

				25,970		25,775
Buildings and Real Estate – 0.7%
GFRC 360, LLC – Line of Credit, $500 available (L + 8.0%, 9.0% Cash, Due 9/2021)^(C)		700		700		690
GFRC 360, LLC – Term Debt (L + 8.0%, 9.0% Cash, Due 9/2021)^(C)		1,000		1,000		985

				1,700		1,675
Diversified/Conglomerate Service – 23.7%
DKI Ventures, LLC – Line of Credit, $2,500 available (L + 8.3%, 9.3% Cash, 2.0% PIK, Due 12/2021)^(C)		—		—		—
DKI Ventures, LLC – Term Debt (L + 8.3%, 9.3% Cash, 2.0% PIK, Due 12/2023)^(C)		6,001		6,001		4,802
ENET Holdings, LLC – Term Debt (10.2% Cash, Due 12/2022)^(C)(F)		1,000		1,000		795
ENET Holdings, LLC – Term Debt (10.2% Cash, Due 4/2025)^(C)(F)		29,000		29,000		23,055
R2i Holdings, LLC – Line of Credit, $1,171 available (8.0% Cash, Due 12/2021)^(C)(F)		829		829		808
R2i Holdings, LLC – Term Debt (8.0% Cash, Due 12/2023)^(C)(F)		19,625		19,625		19,134
Vision Government Solutions, Inc. – Line of Credit, $2,500 available (L + 8.8%, 9.8% Cash, Due 12/2022)^(C)		—		—		—
Vision Government Solutions, Inc. – Term Debt (L + 8.8%, 9.8% Cash, Due 12/2022)^(C)		9,975		9,945		9,925

				66,400		58,519
Healthcare, Education, and Childcare – 27.5%
ALS Education, LLC – Line of Credit, $4,000 available (L + 7.5%, 9.0% Cash, Due 5/2025)^(C)		—		—		—
ALS Education, LLC – Term Debt (L + 7.5%, 9.0% Cash, Due 5/2025)^(C)		21,340		21,340		21,313
Effective School Solutions LLC – Line of Credit, $2,000 available (L + 7.8%, 8.8% Cash, Due 12/2025)^(C)		—		—		—
Effective School Solutions LLC – Term Debt (L + 7.8%, 8.8% Cash, Due 12/2025)^(C)		19,000		19,000		19,000
Effective School Solutions LLC – Delayed Draw Term Loan, $3,200 available (L + 7.8%, 8.8% Cash, Due 12/2025)^(C)		—		—		—
EL Academies, Inc. – Delayed Draw Term Loan, $0 available (L + 8.0%, 9.0% Cash, Due 8/2022)^(C)		16,000		15,988		15,840
EL Academies, Inc. – Term Debt (L + 8.0%, 9.0% Cash, Due 8/2022)^(C)		12,000		11,985		11,880

				68,313		68,033
Machinery – 2.5%
Arc Drilling Holdings LLC – Line of Credit, $875 available (L + 8.0%, 9.3% Cash, Due 11/2022)^(C)		125		125		121
Arc Drilling Holdings LLC – Term Debt (L + 9.5%, 10.8% Cash, 3.0% PIK, Due 11/2022)^(C)		5,916		5,916		5,741
Precision International, LLC – Line of Credit, $500 available (L + 7.5%, 8.5% Cash, Due 9/2021)^(C)		—		—		—
Precision International, LLC – Term Debt (10.0% Cash, Due 9/2021)^(C)(F)		286		286		280

				6,327		6,142
Printing and Publishing – 0.0%
Chinese Yellow Pages Company – Line of Credit, $0 available (PRIME + 4.0%, 7.3% Cash, Due 2/2015)^(E)(V)		107		107		—

Telecommunications – 10.5%

B+T Group Acquisition, Inc.^(S) – Line of Credit, $0 available (L + 11.0%, 13.0% Cash, Due 12/2021)^(C)(H)		1,200		1,200		1,101
B+T Group Acquisition, Inc.^(S) – Term Debt (L + 11.0%, 13.0% Cash, Due 12/2021)^(C)(H)		6,000		6,000		5,505
NetFortris Corp. – Term Debt (L + 9.0%, 9.5% Cash, Due 2/2021)^(C)		23,302		23,302		19,224

				30,502		25,830


Total Secured First Lien Debt			$	211,730	$	198,385

Company and Investment^(A)(B)(W)(Y)
   Principal/
Shares/
Units^(J)(X)    Cost    Fair
Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS^(M) – 146.3%

Secured First Lien Debt – 74.8%

Automobile – 1.5%

Meridian Rack & Pinion, Inc.^(S) – Term Debt (L + 11.5%, 13.5% Cash, Due 12/2018)^(C)
   $ 4,140    $ 4,140    $ 3,312
Beverage, Food, and Tobacco – 3.0%

Triple H Food Processors, LLC - Line of Credit, $1,500 available (L + 6.8%, 8.3% Cash, Due 8/2018)^(C)
   —      —      —
Triple H Food Processors, LLC – Term Debt (L + 8.3%, 9.8% Cash, Due 8/2020)^(C)
   6,600    6,600    6,666




      6,600    6,666
Buildings and Real Estate – 0.9%

GFRC Holdings, LLC – Line of Credit, $165 available (L + 8.0%, 9.6% Cash, Due 9/2018)^(E)
   1,035    1,035    1,035
GFRC Holdings, LLC – Term Debt (L + 8.0%, 9.6% Cash, Due 9/2018)^(E)
   1,000    1,000    1,000




      2,035    2,035
Diversified/Conglomerate Service – 19.7%

IA Tech, LLC – Term Debt (L + 11.0%, 12.6% Cash, Due 6/2021)^(C)
   23,000    23,000    23,690
Travel Sentry, Inc. – Term Debt (L + 8.0%, 9.7% Cash, Due 12/2021)^(C)(U)
   8,902    8,902    9,192
Vision Government Solutions, Inc. – Line of Credit, $0 available (L + 8.8%, 10.3% Cash, Due 1/2019)^(C)
   1,450    1,450    1,431
Vision Government Solutions, Inc. – Delayed Draw Term Loan, $900 available (10.0% Cash, Due 1/2019)^(C)(F)
   1,600    1,600    1,511
Vision Government Solutions, Inc. – Term Debt (L + 8.8%, 10.3% Cash, Due 1/2019)^(C)
   9,000    9,000    8,531




      43,952    44,355
Healthcare, education, and childcare – 8.7%

EL Academies, Inc. – Line of Credit, $2,000 available (L + 8.8%, 10.3% Cash, Due 8/2020)^(C)
   —      —      —
EL Academies, Inc. – Delayed Draw Term Loan, $10,000 available (L + 8.8%, 10.3% Cash, Due 8/2022)^(C)
   —      —      —
EL Academies, Inc. – Term Debt (L + 8.8%, 10.3% Cash, Due 8/2022)^(C)
   12,000    12,000    12,030
TWS Acquisition Corporation – Term Debt (L + 8.0%, 9.6% Cash, Due 7/2020)^(C)
   7,353    7,353    7,537




      19,353    19,567
Machinery – 3.0%

Arc Drilling Holdings LLC – Line of Credit, $1,000 available (L + 8.0%, 9.6% Cash, Due 11/2020)^(I)
   —      —      —
Arc Drilling Holdings LLC – Term Debt (L + 9.5%, 11.1% Cash, Due 11/2022)^(I)
   5,880    5,880    5,880
Precision International, LLC – Term Debt (10.0% PIK, Due 9/2021)^(C)(F)
   830    830    822




      6,710    6,702
Oil and Gas – 16.9%

Impact! Chemical Technologies, Inc. – Line of Credit, $2,164 available (L + 8.8%, 10.3% Cash, Due 12/2020)^(I)
   336    336    336
Impact! Chemical Technologies, Inc. – Term Debt (L + 8.8%, 10.8% Cash, Due 12/2020)^(I)
   20,000    20,000    20,000
WadeCo Specialties, Inc. – Line of Credit, $2,425 available (L + 7.0%, 8.6% Cash, Due 4/2018)^(C)
   575    575    580
WadeCo Specialties, Inc. – Term Debt (L + 7.0% 8.6% Cash, Due 3/2019)^(C)
   10,191    10,191    10,292
WadeCo Specialties, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 3/2019)^(C)
   7,000    7,000    7,035




      38,102    38,243
Personal andNon-Durable Consumer Products (Manufacturing Only) – 2.8%

Canopy Safety Brands, LLC – Line of Credit, $500 available (L + 6.5%, 8.1% Cash, Due 9/2019)^(C)
   —      —      —
Canopy Safety Brands, LLC – Term Debt (L + 9.5%, 11.1% Cash, Due 9/2021)^(C)
   6,500    6,500    6,598




      6,500    6,598
Printing and Publishing – 0.0%

Chinese Yellow Pages Company – Line of Credit, $0 available (PRIME + 4.0%, 8.5% Cash, Due 2/2015)^(E)(V)
   107    107    —
Telecommunications – 18.3%

Applied Voice & Speech Technologies, Inc. – Term Debt (L + 9.3%, 10.8% Cash, Due 10/2022)^(I)
   11,000    11,000    11,000
B+T Group Acquisition Inc.^(S) – Term Debt (L + 11.0%, 13.0% Cash,
Due 12/2019)^(C)
   6,000    6,000    5,978
NetFortris Corp. – Term Debt (L + 8.4%, 10.0% Cash, Due 2/2021)^(C)
   24,000    24,000    24,420




      41,000    41,398




Total Secured First Lien Debt
      $ 168,499    $ 168,876

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS ~~(Continued)~~

DECEMBER 31, ~~2017~~2020

(UNAUDITED)

(DOLLAR AMOUNTS IN THOUSANDS)

~~(UNAUDITED)~~


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)		Cost		Fair Value
Secured Second Lien Debt – 67.2%
Automobile – 3.9%
Sea Link International IRB, Inc. – Term Debt (11.3% Cash, 2.0% PIK, Due 3/2023)^(C)(F)	$	10,729	$	10,729	$	9,575

Beverage, Food, and Tobacco – 1.5%
8^th Avenue Food & Provisions, Inc. – Term Debt (L + 7.8%, 7.9% Cash, Due 10/2026)^(D)		3,683		3,704		3,618

Cargo Transportation – 12.5%
AG Transportation Holdings, LLC – Term Debt (L + 10.0%, 13.3% Cash, Due 12/2021)^(C)		13,000		12,978		12,984

American Trailer Rental Group LLC – Term Debt (L + 8.9%, 10.4% Cash, Due 8/2025)^(C)		18,000		18,000		17,910

				30,978		30,894

Chemicals, Plastics, and Rubber – 4.0%
Phoenix Aromas & Essential Oils, LLC – Term Debt (L + 11.5%, 12.5% Cash, Due 5/2024)^(C)		10,012		10,012		9,962

Diversified/Conglomerate Manufacturing – 13.1%
Magpul Industries Corp. – Term Debt (L + 10.5%, 11.5% Cash, Due 5/2026)^(C)		28,000		28,000		28,210
Tailwind Smith Cooper Intermediate Corporation – Term Debt (L + 9.0%, 9.1% Cash, Due 5/2027)^(D)		5,000		4,783		4,150

				32,783		32,360

Diversified/Conglomerate Service – 13.1%
CHA Holdings, Inc. – Term Debt (L + 8.8%, 9.8% Cash, Due 4/2026)^(D)(U)		3,000		2,955		2,700
Drive Chassis Holdco, LLC – Term Debt (L + 8.3%, 8.4% Cash, Due 4/2026)^(D)		5,000		4,793		4,962

Gray Matter Systems, LLC – Term Debt (12.0% Cash, Due 12/2026)^(C)(F)		8,100		8,060		8,039
Keystone Acquisition Corp. – Term Debt (L + 9.3%, 10.3% Cash, Due 5/2025)^(D)(U)		4,000		3,947		3,560

Prophet Brand Strategy – Delayed Draw Term Loan, $5,000 available (L + 8.5%, 10.5% Cash, Due 2/2025)^(C)		—		—		—
Prophet Brand Strategy – Term Debt (L + 8.5%, 10.5% Cash, Due 2/2025)^(C)		13,000		13,000		13,033

				32,755		32,294

Healthcare, Education, and Childcare – 2.3%
Medical Solutions Holdings, Inc. – Term Debt (L + 8.4%, 9.4% Cash, Due 6/2025)^(D)		3,000		2,970		2,850

Medical Solutions Holdings, Inc. – Term Debt (L + 8.8%, 9.8% Cash, Due 6/2025)^(D)		3,000		2,950		2,850

				5,920		5,700

Home and Office Furnishings, Housewares and Durable Consumer Products – 3.9%
Belnick, Inc. – Term Debt (11.0% Cash, Due 8/2023)^(C)(F)		10,000		10,000		9,750

Hotels, Motels, Inns, and Gaming – 3.3%
Vacation Rental Pros Property Management, LLC – Term Debt (L + 10.0%, 11.0% Cash, 3.0% PIK, Due 6/2023)^(C)		8,113		8,113		8,113

Machinery – 0.4%
CPM Holdings, Inc. – Term Debt (L + 8.3%, 8.4% Cash, Due 11/2026)^(D)		1,000		1,000		970

Oil and Gas – 9.2%
Imperative Holdings Corporation – Term Debt (L + 10.3%, 12.3% Cash, 1.8% PIK, Due 9/2022)^(C)		27,706		27,706		22,719

Total Secured Second Lien Debt			$	173,700	$	165,955

Company and Investment^(A)(B)(W)(Y)
   Principal/
Shares/
Units^(J)(X)    Cost    Fair
Value
Secured Second Lien Debt – 65.1%

Automobile – 2.2%

Sea Link International IRB, Inc. – Term Debt (11.3% Cash, Due 3/2023)^(C)(F)
   $ 5,000    $ 4,976    $ 5,031
Beverage, Food, and Tobacco – 3.0%

The Mochi Ice Cream Company – Term Debt (L + 10.5%, 12.1% Cash, Due 1/2021)^(C)
   6,750    6,750    6,826
Cargo Transportation – 5.9%

AG Transportation Holdings, LLC. – Term Debt (L + 10.0%, 13.3% Cash, Due 3/2020)^(C)
   13,000    13,000    13,098
Chemicals, Plastics, and Rubber – 0.4%

Vertellus Holdings LLC – Term Debt (L + 12.0%, 13.6% Cash, Due 10/2021)^(C)
   1,099    1,099    922
Diversified/Conglomerate Manufacturing – 9.6%

Alloy Die Casting Co.^(S) – Term Debt (L + 11.5%, 13.5% Cash, Due 4/2021)^(C)(H)
   5,235    5,235    3,350
Alloy Die Casting Co.^(S) – Term Debt (L + 11.5%, 13.5% Cash, Due 4/2021)^(C)(H)
   75    75    48
Alloy Die Casting Co.^(S) – Term Debt (Due 4/2021)^(C)(P)
   390    390    252
United Flexible, Inc. – Term Debt (L + 9.5%, 11.1% Cash, 2.0% PIK, Due 2/2022)^(C)
   18,085    18,005    18,107




      23,705    21,757
Diversified/Conglomerate Service – 20.5%

DigiCert Holdings, Inc. – Term Debt (L + 8.0%, 9.6% Cash, Due 10/2025)^(D)
   5,000    4,975    5,013
Gray Matter Systems, LLC – Delayed Draw Term Loan, $2,000 available (12.0% Cash, Due 11/2023)^(F)(I)
   —      —      —
Gray Matter Systems, LLC – Term Debt (12.0% Cash, Due 11/2023)^(F)(I)
   7,500    7,500    7,500
Keystone Acquisition Corp. – Term Debt (L + 9.3%, 10.9% Cash, Due 5/2025)^(D)(U)
   4,000    3,924    3,980
LDiscovery, LLC – Term Debt (L + 10.0%, 11.6% Cash, Due 12/2023)^(D)
   5,000    4,820    4,000
Red Ventures, LLC – Term Debt (L + 8.0%, 9.6% Cash, Due 11/2025)^(D)
   3,625    3,566    3,625
TapRoot Partners, Inc. – Term Debt (L + 10.3%, 11.8% Cash, Due 10/2022)^(C)
   22,000    22,000    22,220






      46,785    46,338
Healthcare, education, and childcare – 8.0%

Medical Solutions Holdings, Inc. – Term Debt (L + 8.3%, 9.8% Cash, Due 12/2023)^(D)
   3,000    2,957    2,970
Merlin International, Inc. – Term Debt (L + 10.0%, 11.6% Cash, Due 8/2022)^(C)
   10,000    10,000    10,225
NetSmart Technologies, Inc. – Term Debt (L + 9.5%, 11.1% Cash, Due 10/2023)^(D)
   3,660    3,610    3,660
New Trident Holdcorp, Inc. – Term Debt (L + 10.0%, 11.7% PIK, Due 7/2020)^(D)(U)
   4,000    4,000    1,191




      20,567    18,046
Home and Office Furnishings, Housewares and Durable Consumer Products – 4.5%

Belnick, Inc. – Term Debt (11.0% Cash, Due 8/2023)^(C)(F)
   10,000    10,000    10,150
Hotels, Motels, Inns, and Gaming – 3.2%

Vacation Rental Pros Property Management, LLC – Term Debt (L + 10.0%, 11.6% Cash, 3.0% PIK,
Due 6/2023)^(C)
   7,199    7,199    6,938
Oil and Gas – 7.0%

Francis Drilling Fluids, Ltd. – Term Debt (L + 10.4%, 11.9% PIK, Due 4/2020)^(C)
   17,245    17,128    10,766
Francis Drilling Fluids, Ltd. – Term Debt (L + 9.3%, 10.8% PIK, Due 4/2020)^(C)
   7,945    7,891    4,954




      25,019    15,720
Telecommunications – 0.4%

Neustar, Inc. – Term Debt (L + 8.0%, 9.6% Cash, Due 8/2025)^(D)
   1,000    1,000    1,008
Textiles and Leather – 0.4%

ABG Intermediate Holdings 2 LLC – Term Debt (L + 7.8%, 9.4% Cash, Due 9/2025)^(D)(U)
   1,000    1,000    1,010




Total Secured Second Lien Debt
      $ 161,100    $ 146,844




Unsecured Debt – 1.5%

Healthcare, education, and childcare – 1.5%

Edmentum Ultimate Holdings, LLC – Term Debt (10.0% PIK, Due 6/2020)^(C)(F)
   $ 3,352    $ 3,352    $ 3,356
Preferred Equity – 1.9%

Automobile – 0.1%

Meridian Rack & Pinion, Inc.^(S)– Preferred Stock^(E)(G)
   1,449    $ 1,449    $ 161
Buildings and Real Estate – 0.3%

GFRC Holdings, LLC – Preferred Stock^(E)(G)
   1,000    1,025    674

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS ~~(Continued)~~

DECEMBER 31, ~~2017~~2020

(UNAUDITED)

(DOLLAR AMOUNTS IN THOUSANDS)

~~(UNAUDITED)~~


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)			Cost		Fair Value
Unsecured Debt – 0.0%
Diversified/Conglomerate Service – 0.0%
Frontier Financial Group Inc. – Convertible Debt (6.0%, Due 6/2022)^(E)(F)	$	198		$	198	$	15

Preferred Equity – 2.0%
Automobile – 0.1%
Sea Link International IRB, Inc. – Preferred Stock^(E)(G)		98,039			98		111

Beverage, Food, and Tobacco – 0.0%
Triple H Food Processors, LLC – Preferred Stock^(E)(G)		75			75		86

Buildings and Real Estate – 0.6%
GFRC 360, LLC – Preferred Stock^(E)(G)		1,000			1,025		1,565

Diversified/Conglomerate Service – 0.0%
Frontier Financial Group Inc. – Preferred Stock^(E)(G)		766			500		—
Frontier Financial Group Inc. – Preferred Stock Warrant^(E)(G)		168			—		—

					500		—

Oil and Gas – 0.4%
FES Resources Holdings LLC – Preferred Equity Units^(E)(G)		6,350			6,350		—
Imperative Holdings Corporation – Preferred Equity Units^(E)(G)		13,740			632		1,073

					6,982		1,073

Telecommunications – 0.9%
B+T Group Acquisition, Inc.^(S) – Preferred Stock^(E)(G)		6,130			2,024		—
NetFortris Corp. – Preferred Stock^(E)(G)		7,890,860			789		2,162

					2,813		2,162

Total Preferred Equity				$	11,493	$	4,997


Common Equity – 9.4%
Aerospace and Defense – 1.9%
Antenna Research Associates, Inc. – Common Equity Units^(E)(G)		4,283		$	4,283	$	4,632

Automobile– 0.1%
Sea Link International IRB, Inc.– Common Equity Units^(E)(G)		823,333			823		321

Beverage, Food, and Tobacco – 0.2%
Triple H Food Processors, LLC – Common Stock^(E)(G)		250,000			250		599

Buildings and Real Estate – 0.0%
GFRC 360, LLC – Common Stock Warrants^(E)(G)		45.0	%		—		—

Cargo Transportation – 2.1%
AG Transportation Holdings, LLC – Member Profit Participation^(E)(G)		27.0	%		1,350		3,518
AG Transportation Holdings, LLC – Profit Participation Warrants^(E)(G)		5.0	%		244		492
American Trailer Rental Group LLC – Common Stock^(E)(G)		6,667			1,000		1,117

					2,594		5,127

Healthcare, Education, and Childcare – 2.1%
GSM MidCo LLC – Common Stock^(E)(G)		767			767		676
Leeds Novamark Capital I, L.P. – Limited Partnership Interest ($843 uncalled capital commitment)^(G)(L)(R)		3.5	%		1,499		4,409

					2,266		5,085

Machinery – 0.3%
Arc Drilling Holdings LLC – Common Stock^(E)(G)		15,000			1,500		271
Precision International, LLC – Membership Unit Warrant^(E)(G)		33.3	%		—		529

					1,500		800

Company and Investment^(A)(B)(W)(Y)
   Principal/
Shares/
Units^(J)(X) Cost    Fair
Value
Diversified/Conglomerate Manufacturing – 0.3%

Alloy Die Casting, Co.^(S)– Preferred Stock^(E)(G)
   2,192 2,192    —
United Flexible, Inc. – Preferred Stock^(E)(G)
   538 538    631




   2,730    631
Diversified/Conglomerate Service – 0.2%

Frontier Financial Group Inc. – Preferred Stock^(E)(G)
   766 500    500
Frontier Financial Group Inc. – Preferred Stock Warrant^(E)(G)
   168 —      —




   500    500
Oil and Gas – 0.8%

Francis Drilling Fluids, Ltd. – Preferred Equity Units^(E)(G)
   1,656 1,215    —
WadeCo. Specialties, Inc. – Preferred Stock^(E)(G)
   1,000 618    2,098




   1,833    2,098
Telecommunications – 0.2%

B+T Group Acquisition, Inc.^(S) – Preferred Stock^(E)(G)(J)
   5,503 1,799    —
NetFortris Corp. – Preferred Stock^(E)(G)
   1,250,000 125    375




   1,924    375




Total Preferred Equity
   $ 9,461    $ 4,439




Common Equity – 3.0%

Aerospace and Defense – 0.3%

FedCap Partners, LLC – Class A Membership Units ($0 Uncalled
Commitment)^(G)(K)(R)
   80 $ 1,634    $ 751
Automobile – 0.2%

Sea Link International IRB, Inc. – Common Equity Units^(E)(G)
   494,902 495    378
Beverage, Food, and Tobacco – 0.2%

The Mochi Ice Cream Company – Common Stock^(E)(G)
   450 450    —
Triple H Food Processors, LLC – Common Stock^(E)(G)
   250,000 250    442




   700    442
Buildings and Real Estate – 0.0%

GFRC Holdings, LLC – Common Stock Warrants^(E)(G)
   45.0 % —      —
Cargo Transportation – 0.0%

AG Transportation Holdings, LLC – Member Profit Participation^(E)(G)
   18.0 % 1,000    —
AG Transportation Holdings, LLC – Profit Participation Warrants^(E)(G)
   12.0 % 244    —




   1,244    —
Chemicals, Plastics, and Rubber – 0.2%

Vertellus Holdings LLC – Common Stock Units^(E)(G)
   879,121 3,017    527
Diversified/Conglomerate Manufacturing – 0.0%

Alloy Die Casting, Co.^(S) – Common Stock^(E)(G)
   270 18    —
United Flexible, Inc. – Common Stock^(E)(G)
   1,158 148    —




   166    —
Healthcare, education, and childcare – 1.1%

Edmentum Ultimate Holdings, LLC – Common Stock^(E)(G)
   21,429 2,636    —
EL Academies, Inc. – Common Stock^(E)(G)
   500 500    432
Leeds Novamark Capital I, L.P. – Limited Partnership Interest ($986 uncalled capital commitment)^(G)(L)(R)
   3.5 % 2,010    2,098




   5,146    2,530
Machinery – 0.7%

Arc Drilling Holdings LLC – Common Stock^(I)(G)
   16.7 % 1,500    1,500
Precision International, LLC – Membership Unit Warrant^(E)(G)
   33.3 % —      41




   1,500    1,541
Oil and Gas – 0.1%

Francis Drilling Fluids, Ltd. – Common Equity Units^(E)(G)
   1,656 1    —
W3, Co. – Common Equity^(D)(G)
   435 499    131




   500    131
Personal andNon-Durable Consumer Products (Manufacturing Only) – 0.2%

Canopy Safety Brands, LLC – Participation Warrant^(E)(G)
   1 500    325
Funko Acquisition Holdings, LLC^(S) – Common Units^(G)(T)
   67,873 166    157




   666    482
Telecommunications – 0.0%

NetFortris Corp. – Common Stock Warrant^(E)(G)
   1 1    —




Total Common Equity
   $ 15,069    $ 6,782




TotalNon-Control/Non-Affiliate Investments
   $ 357,481    $ 330,297

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS ~~(Continued)~~

DECEMBER 31, ~~2017~~2020

(UNAUDITED)

(DOLLAR AMOUNTS IN THOUSANDS)

~~(UNAUDITED)~~


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)			Cost		Fair Value
Oil and Gas – 0.1%
FES Resources Holdings LLC – Common Equity Units^(E)(G)		6,233			—		—
Total Safety Holdings, LLC – Common Equity^(E)(G)		435			499		280

					499		280
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
Funko Acquisition Holdings, LLC^(S) – Common Units^(G)(T)		12,180			59		86

Telecommunications – 0.0%
B+T Group Acquisition, Inc.^(S) – Common Stock Warrant^(E)(G)		1.5	%		—		—
NetFortris Corp. – Common Stock Warrant^(E)(G)		1			1		—

					1		—
Textiles and Leather – 2.6%
Targus Cayman HoldCo, Ltd. – Common Stock^(E)(G)		3,076,414			2,062		6,312


Total Common Equity				$	14,337	$	23,242

Total Non-Control/Non-Affiliate Investments				$	411,458	$	392,594


AFFILIATE INVESTMENTS^(N)– 17.4%
Secured First Lien Debt – 6.7%
Diversified/Conglomerate Manufacturing – 3.5%
Edge Adhesives Holdings, Inc.^(S) – Line of Credit, $0 available (L + 8.0%, 10.0% Cash, Due 9/2021)^(C)	$	680		$	680	$	661
Edge Adhesives Holdings, Inc.^(S) – Term Debt (L + 10.5%, 12.5% Cash, Due 2/2022)^(C)		6,200			6,200		6,030
Edge Adhesives Holdings, Inc.^(S) – Term Debt (L + 11.8%, 13.8% Cash, Due 2/2022)^(C)		2,000			2,000		1,945

					8,880		8,636

Diversified/Conglomerate Service – 3.2%
Encore Dredging Holdings, LLC – Line of Credit, $3,000 available (L + 8.0%, 9.0% Cash, Due 12/2025)^(C)		—			—		—
Encore Dredging Holdings, LLC – Term Debt (L + 8.0%, 9.0% Cash, Due 12/2025)^(C)		8,000			8,000		8,000

					8,000		8,000

Total Secured First Lien Debt				$	16,880	$	16,636


Secured Second Lien Debt – 8.2%
Diversified Natural Resources, Precious Metals and Minerals – 8.2%
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025)^(C)	$	6,000		$	6,000	$	5,970
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025)^(C)		8,000			8,000		7,960
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025)^(C)		3,300			3,300		3,284
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025)^(C)		3,000			3,000		2,985

					20,300		20,199

Total Secured Second Lien Debt				$	20,300	$	20,199


Preferred Equity –1.6%
Diversified/Conglomerate Manufacturing – 0.0%
Edge Adhesives Holdings, Inc.^(S) – Preferred Stock^(E)(G)		5,466		$	5,466	$	—

Diversified/Conglomerate Service– 0.8%
Encore Dredging Holdings, LLC^(S) – Preferred Stock^(E)(G)		2,000,000			2,000	$	2,000

Diversified Natural Resources, Precious Metals and Minerals – 0.6%
Lignetics, Inc. – Preferred Stock^(E)(G)		68,880			1,321		1,589

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.2%
Canopy Safety Brands, LLC – Preferred Stock^(E)(G)		500,000			500		449

Total Preferred Equity				$	9,287	$	4,038


Common Equity – 0.9%
Diversified Natural Resources, Precious Metals and Minerals – 0.9%
Lignetics, Inc. – Common Stock^(E)(G)		152,603		$	1,855	$	2,211

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
Canopy Safety Brands, LLC – Common Stock^(E)(G)		500,000			—		—

Total Common Equity				$	1,855	$	2,211

Total Affiliate Investments				$	48,322	$	43,084

Company and Investment^(A)(B)(W)(Y)
   Principal/
Shares/
Units^(J)(X)    Cost    Fair
Value
AFFILIATE INVESTMENTS^(N)– 19.4%

Secured First Lien Debt – 8.9%

Diversified/Conglomerate Manufacturing – 8.9%

Edge Adhesives Holdings, Inc.^(S) – Term Debt (L + 10.5%, 12.5% Cash, Due 2/2019)^(C)
   $ 6,200    $ 6,200    $ 5,781
Edge Adhesives Holdings, Inc.^(S) – Term Debt (L + 11.8%, 13.8% Cash, Due 2/2019)^(C)
   1,600    1,600    1,500
LWO Acquisitions Company LLC – Line of Credit, $0 available (L + 5.5%. 7.1% Cash, 2.0% PIK, Due 12/2019)^(C)
   2,762    2,761    2,555
LWO Acquisitions Company LLC – Term Debt (L + 8.5%, 10.1% Cash, 2.0% PIK, Due 12/2019)^(C)
   10,998    10,979    10,173




      21,540    20,009




Total Secured First Lien Debt
      $ 21,540    $ 20,009




Secured Second Lien Debt – 7.4%

Diversified Natural Resources, Precious Metals and Minerals – 7.4%

Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 11/2022)^(C)
   $ 6,000    $ 6,000    $ 5,820
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 11/2022)^(C)
   8,000    8,000    7,760
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 11/2022)^(C)
   3,300    3,300    3,201




      17,300    16,781




Total Secured Second Lien Debt
      $ 17,300    $ 16,781




Unsecured Debt – 0.0%

Diversified/Conglomerate Manufacturing – 0.0%

LWO Acquisitions Company LLC – Term Debt (Due 12/2019)^(C)(P)
   $ 95    $ 95    $ 88
Preferred Equity – 0.5%

Diversified/Conglomerate Manufacturing – 0.2%

Edge Adhesives Holdings, Inc.^(S) – Preferred Stock^(E)(G)
   2,516    $ 2,516    $ 385
Diversified Natural Resources, Precious Metals and Minerals – 0.3%

Lignetics, Inc. – Preferred Stock^(E)(G)
   40,000    800    837




Total Preferred Equity
      $ 3,316    $ 1,222




Common Equity – 2.6%

Diversified/Conglomerate Manufacturing – 0.0%

LWO Acquisitions Company LLC – Common Units^(E)(G)
   921,000    $ 921    $ —
Diversified Natural Resources, Precious Metals and Minerals – 0.5%

Lignetics, Inc. – Common Stock^(E)(G)
   152,603    1,855    1,126
Textiles and Leather – 2.1%

Targus Cayman HoldCo, Ltd. – Common Stock^(E)(G)
   3,076,414    5,009    4,630




Total Common Equity
      $ 7,785    $ 5,756




Total Affiliate Investments
      $ 50,036    $ 43,856




CONTROL INVESTMENTS^(O) – 8.2%

Secured First Lien Debt – 3.3%

Machinery – 1.8%

PIC 360, LLC – Term Debt (14.0%, Due 12/2017)^(E)(F)
   $ 4,000    $ 4,000    $ 4,000
Printing and Publishing – 1.5%

Sunshine Media Holdings – Line of Credit, $672 available (8.0% Cash, Due 5/2018)^(E)(F)
   1,328    1,328    1,328
Sunshine Media Holdings – Term Debt (8.0% Cash, Due 5/2018)^(E)(F)(H)
   5,000    3,525    585
Sunshine Media Holdings – Term Debt (L + 3.8%, 5.3% Cash, Due 5/2018)^(E)(H)
   11,948    8,401    1,397
Sunshine Media Holdings – Term Debt (L + 4.0%, 5.6% Cash, Due 5/2018)^(E)(H)
   10,700    10,700    —




      23,954    3,310




Total Secured First Lien Debt
      $ 27,954    $ 7,310




Secured Second Lien Debt – 3.6%

Automobile – 3.6%

Defiance Integrated Technologies, Inc. – Term Debt (L + 9.5%, 11.1% Cash, Due 8/2023)^(E)
   $ 8,065    $ 8,065    $ 8,065

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS ~~(Continued)~~

DECEMBER 31, ~~2017~~2020

(UNAUDITED)

(DOLLAR AMOUNTS IN THOUSANDS)

~~(UNAUDITED)~~

Company and Investment^(A)(B)(W)(Y)
   Principal/
Shares/
Units^(J)(X)    Cost    Fair
Value
Preferred Equity – 0.0%

Printing and Publishing – 0.0%

Sunshine Media Holdings – Preferred Stock^(E)(G)(J)
   15,270    $ 5,275    $ —
Common Equity – 1.3%

Automobile – 1.2%

Defiance Integrated Technologies, Inc. – Common Stock^(E)(G)
   33,321    $ 580    $ 2,643
Machinery – 0.1%

PIC 360, LLC – Common Equity Units^(E)(G)
   1    1    259
Printing and Publishing – 0.0%

Sunshine Media Holdings – Common Stock^(E)(G)
   1,867    740    —
Sunshine Media Holdings – Common Stock Warrants^(E)(G)
   72    —      —




      740    —




Total Common Equity
      $ 1,321    $ 2,902




Total Control Investments
      $ 42,615    $ 18,277




TOTAL INVESTMENTS – 173.9%
      $ 450,132    $ 392,430


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)		Cost		Fair Value
CONTROL INVESTMENTS^(O) – 6.8%
Secured First Lien Debt – 2.0%
Diversified/Conglomerate Manufacturing – 1.5%
LWO Acquisitions Company LLC – Term Debt (L + 7.5%, 10.0% Cash, Due 6/2021)^(E)	$	6,000	$	6,000	$	3,600
LWO Acquisitions Company LLC – Term Debt (Due 6/2021)^(E)(P)		10,632		10,632		—

				16,632		3,600

Printing and Publishing – 0.5%
TNCP Intermediate HoldCo, LLC – Line of Credit, $700 available (8.0% Cash, Due 9/2021)^(E)(F)		1,300		1,287		1,300


Total Secured First Lien Debt			$	17,919	$	4,900


Secured Second Lien Debt – 3.3%
Automobile– 3.3%
Defiance Integrated Technologies, Inc. – Term Debt (L + 9.5%, 11.0% Cash, Due 5/2026)^(E)	$	8,065	$	8,065	$	8,065

Unsecured Debt – 0.0%
Diversified/Conglomerate Manufacturing – 0.0%
LWO Acquisitions Company LLC – Term Debt (Due 6/2023)^(E)(P)	$	95	$	95	$	—

Preferred Equity – 0.1%
Automobile– 0.1%
Defiance Integrated Technologies, Inc. – Preferred Stock^(E)(G)		6,043	$	250	$	201

Common Equity – 1.4%
Automobile– 0.0%
Defiance Integrated Technologies, Inc. – Common Stock^(E)(G)		33,321	$	580	$	—

Diversified/Conglomerate Manufacturing – 0.0%
LWO Acquisitions Company LLC – Common Units^(E)(G)		921,000		921		—

Machinery – 1.2%
PIC 360, LLC – Common Equity Units^(E)(G)		750		1		2,860

Printing and Publishing – 0.2%
TNCP Intermediate HoldCo, LLC – Common Equity Units^(E)(G)		790,000		500		655

Total Common Equity			$	2,002	$	3,515

Total Control Investments			$	28,331	$	16,681

TOTAL INVESTMENTS – 183.1%			$	488,111	$	452,359

^(A)

Certain of the securities listed in this schedule are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, totaling ~~$348.9~~$421.5 million at fair value, are pledged as collateral tounder our revolving line of credit, as described further in Note 5—~~Borrowings.~~Borrowings in the accompanying Notes to Consolidated Financial Statements. Under the Investment Company Act of 1940, as amended (the “1940 Act”), we may not acquire anynon-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. As of December 31, ~~2017,~~2020, our investments in ~~FedCap Partners, LLC (“FedCap”),~~ Leeds Novamark Capital I, L.P. (“Leeds”), and Funko Acquisition Holdings, LLC (“Funko”) are considerednon-qualifying assets under Section 55 of the 1940 Act. Suchnon-qualifying assets represent ~~0.8%~~1.0% of total investments, at fair value, as of December 31, ~~2017.~~2020.

^(B)

Unless indicated otherwise, all cash interest rates are indexed to30-day London Interbank Offered Rate (“LIBOR” or “L”), which was ~~1.56%~~0.14% as of December 31, ~~2017.~~2020. If applicable,paid-in-kind (“PIK”) interest rates are noted separately from the cash interest rate. Certain securities are subject to an interest rate floor. The cash interest rate is the greater of the floor or LIBOR plus a spread. Due dates represent the contractual maturity date.

^(C)	Fair value was based on an internal yield analysis or on estimates of value submitted by ~~Standard & Poor’s Securities Evaluations, Inc.~~ICE Data Pricing and Reference Data, LLC (“~~SPSE”~~ICE”).

^(D)	Fair value was based on the indicative bid price on or near December 31, ~~2017,~~2020, offered by the respective syndication agent’s trading desk.

^(E)	Fair value was based on the total enterprise value of the portfolio company, which was then allocated to the portfolio company’s securities in order of their relative priority in the capital structure.

^(F)	Debt security has a fixed interest rate.

^(G)	Security isnon-income producing.

^(H)	Debt security is onnon-accrual status.

^(I)	~~New investment valued at cost, as it was determined that the price paid during the quarter ended December 31, 2017 best represents fair value as of December 31, 2017.~~ Reserved.

^(J)

Where applicable, aggregates all shares of a class of stock owned without regard to specific series owned within such class (some series of which may or may not be voting shares) or aggregates all warrants to purchase shares of a class of stock owned without regard to specific series of such class of stock such warrants allow us to purchase.

^(K)	~~There are certain limitations on our ability to transfer our units owned, withdraw or resign prior to dissolution of the entity, which must occur no later than May 3, 2020.~~ Reserved.

^(L)	There are certain limitations on our ability to withdraw our partnership interest prior to dissolution of the entity, which must occur no later than May 9, 2024 or two years after all outstanding leverage has matured.

^(M)	Non-Control/Non-Affiliate investments, as defined by the 1940 Act, are those that are neither Control nor Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.

^(N)	Affiliate investments, as defined by the 1940 Act, are those in which we own, with the power to vote, between and inclusive of 5.0% and 25.0% of the issued and outstanding voting securities.

^(O)	Control investments, as defined by the 1940 Act, are those where we have the power to exercise a controlling influence over the management or policies of the portfolio company, which may include owning, with the power to vote, more than 25.0% of the issued and outstanding voting securities.

^(P)	Debt security does not have a stated interest rate that is payable thereon.

^(Q)

Reserved.

^(R)	Fair value was based on net asset value provided by the fund as a practical expedient.

^(S)	One of our affiliated funds, Gladstone Investment Corporation,co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S. Securities and Exchange Commission.

^(T)

Our investment in Funko was valued using Level 2 inputs within the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC ~~820~~820”) fair value hierarchy. Our common units in Funko are convertible to class A common stock in Funko, Inc. upon ~~the expiration of alock-up~~ ~~agreement and~~ meeting ~~other~~certain requirements. Fair value was based on the closing market price of shares of Funko, Inc. as of the reporting date, less a discount for lack of marketability. Funko, Inc. is traded on the Nasdaq ~~Stock~~Global Select Market under the trading symbol “FNKO.” Refer to Note 3—Investments in the accompanyingNotes toConsolidated Financial Statements for additional information.

^(U)	The cash interest rate on this investment was indexed to90-day LIBOR, which was ~~1.69%~~0.24% as of December 31, ~~2017.~~2020.

^(V)	The cash interest rate on this investment was indexed to the U.S. Prime Rate (“PRIME”), which was ~~4.50%~~3.25% as of December 31, ~~2017.~~2020.

^(W)

Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ~~FASB Accounting Standard Codification (“ASC”) Topic~~ASC 820 ~~“Fair Value Measurements and Disclosures” (“ASC 820”)~~ fair value hierarchy. Refer to Note 3—Investments in the accompanyingNotes to Consolidated Financial Statements for additional information.

^(X)	Represents the principal balance for debt investments and the number of shares/units held for equity investments. Warrants are represented as a percentage of ownership, as applicable.

^(Y)	Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of December 31, ~~2017.~~

^(Z)	~~Investment formerly known as HB Capital Resources, Ltd.~~2020.

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, ~~2017~~2020

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment^(A)(B)(W)(Z)
   Principal/
Shares/
Units^(J)(X)    Cost    Fair
Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS^(M) – 132.4%

Secured First Lien Debt – 67.2%

Automobile – 1.7%

Meridian Rack & Pinion, Inc.^(S) – Term Debt (L + 11.5% 13.5% Cash, Due 12/2018)^(C)
   $ 4,140    $ 4,140    $ 3,643
Beverage, Food, and Tobacco – 3.2%

Triple H Food Processors, LLC - Line of Credit, $1,500 available (L + 6.8%, 8.0% Cash, Due 8/2018)^(C)
   —      —      —
Triple H Food Processors, LLC – Term Debt (L + 8.3%, 9.5% Cash, Due 8/2020)^(C)
   6,800    6,800    6,928




      6,800    6,928
Buildings and Real Estate – 1.0%

GFRC Holdings, LLC – Line of Credit, $20 available (L + 8.0%, 9.2% Cash, Due 9/2018)^(E)
   1,180    1,180    1,180
GFRC Holdings, LLC – Term Debt (L + 8.0%, 9.2% Cash, Due 9/2018)^(E)
   1,000    1,000    1,000




      2,180    2,180
Diversified/Conglomerate Service – 20.1%

IA Tech, LLC – Term Debt (L + 11.0%, 12.2% Cash, Due 6/2021)^(C)
   23,000    23,000    23,633
Travel Sentry, Inc. – Term Debt (L + 9.0%, 10.3% Cash, Due 12/2021)^(C)(U)
   8,902    8,902    9,170
Vision Government Solutions, Inc. – Line of Credit, $0 available (L + 8.8%, 10.0% Cash, Due 1/2019)^(C)
   1,450    1,450    1,420
Vision Government Solutions, Inc. – Delayed Draw Term Loan, $900 available (10.0% Cash, Due 1/2019)^(C)(F)
   1,600    1,600    1,485
Vision Government Solutions, Inc. – Term Debt (L + 8.8%, 10.0% Cash, Due 1/2019)^(C)
   9,000    9,000    8,390




      43,952    44,098
Diversified/Conglomerate Manufacturing – 1.6%

Alloy Die Casting Co.^(S) – Term Debt (L + 11.5%, 13.5% Cash, Due 10/2018)^(C)(H)
   5,235    5,235    3,272
Alloy Die Casting Co.^(S) – Term Debt (L + 11.5%, 13.5% Cash, Due 10/2018)^(C)(H)
   75    75    47
Alloy Die Casting Co.^(S) – Term Debt (Due 10/2018)^(C)(P)
   390    390    246




      5,700    3,565
Healthcare, education, and childcare – 9.8%

EL Academies, Inc. – Line of Credit (L + 9.5%, 10.7% Cash, Due 8/2020)^(I)
   —      —      —
EL Academies, Inc. – Delayed Draw Term Loan (L + 9.5%, 10.7% Cash, Due 8/2022)^(I)
   —      —      —
EL Academies, Inc. – Term Debt (L + 9.5%, 10.7% Cash, Due 8/2022)^(I)
   12,000    12,000    12,000
TWS Acquisition Corporation – Term Debt (L + 8.0%, 9.2% Cash, Due 7/2020)^(C)
   9,432    9,432    9,609




      21,432    21,609
Leisure, Amusement, Motion Pictures, Entertainment – 3.6%

Flight Fit N Fun LLC – Term Debt (L + 14.0%, 15.2% Cash, Due 9/2020)^(Q)(Y)
   7,800    7,800    7,800
Machinery – 0.4%

Precision International, LLC – Term Debt (10.0% PIK, Due 9/2021)^(C)(F)
   808    808    798
Oil and Gas – 9.2%

WadeCo Specialties, Inc. – Line of Credit, $425 available (L + 7.0%, 8.2% Cash, Due 4/2018)^(E)
   2,575    2,575    2,575
WadeCo Specialties, Inc. – Term Debt (L + 7.0%, 8.2% Cash, Due 3/2019)^(E)
   10,441    10,427    10,440
WadeCo Specialties, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 3/2019)^(E)
   7,000    7,000    7,000




      20,002    20,015
Personal andNon-Durable Consumer Products (Manufacturing Only) – 3.0%

Canopy Safety Brands, LLC – Line of Credit, $500 available (L + 6.5%, 7.7% Cash, Due 9/2019)^(C)
   —      —      —
Canopy Safety Brands, LLC – Term Debt (L + 9.5%, 10.7% Cash, Due 9/2021)^(C)
   6,600    6,600    6,616




      6,600    6,616
Printing and Publishing – 0.0%

Chinese Yellow Pages Company – Line of Credit, $0 available (PRIME + 4.0%, 8.0% Cash, Due 2/2015)^(E)(V)
   107    107    —
Telecommunications – 13.6%

B+T Group Acquisition Inc.^(S) – Term Debt (L + 11.0%, 13.0% Cash, Due 12/2019)^(C)
   6,000    6,000    5,955
NetFortris Corp. – Line of Credit, $2,000 available (L + 8.4%, 9.6% Cash, Due 11/2017)^(C)
   —      —      —
NetFortris Corp. – Term Debt (L + 8.4%, 9.6% Cash, Due 2/2021)^(C)
   24,000    24,000    24,240




      30,000    30,195




Total Secured First Lien Debt
      $ 149,521    $ 147,447


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)		Cost		Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS^(M) – 171.6%
Secured First Lien Debt – 85.5%
Aerospace and Defense – 14.3%
Aerospace Engineering, LLC – Line of Credit, $2,350 available (L + 7.3%, 8.3% Cash, Due 8/2025)^(C)	$	650	$	650	$	650
Aerospace Engineering, LLC – Term Debt (L + 7.3%, 8.3% Cash, Due 8/2025)^(C)		20,000		20,000		20,000
Antenna Research Associates, Inc. – Term Debt (L + 10.0%, 12.0% Cash, 4.0% PIK, Due 11/2023)^(E)		12,672		12,672		12,672

				33,322		33,322

Beverage, Food, and Tobacco – 10.9%
Café Zupas – Line of Credit, $4,000 available (L + 7.4%, 8.9% Cash, Due 12/2024)^(C)		—		—		—
Café Zupas – Delayed Draw Term Loan, $3,030 available (L + 7.4%, 8.9% Cash, Due 12/2024)^(C)		1,970		1,970		1,931
Café Zupas – Term Debt (L + 7.4%, 8.9% Cash, Due 12/2024)^(C)		24,000		24,000		23,520

				25,970		25,451

Buildings and Real Estate – 0.7%
GFRC 360, LLC – Line of Credit, $500 available (L + 8.0%, 9.0% Cash, Due 9/2021)^(C)		700		700		681
GFRC 360, LLC – Term Debt (L + 8.0%, 9.0% Cash, Due 9/2021)^(C)		1,000		1,000		973

				1,700		1,654
Diversified/Conglomerate Service – 24.9%
DKI Ventures, LLC – Line of Credit, $2,500 available (L + 8.3%, 9.3% Cash, 2.0% PIK, Due 12/2021)^(C)		—		—		—
DKI Ventures, LLC – Term Debt (L + 8.3%, 9.3% Cash, 2.0% PIK, Due 12/2023)^(C)		5,971		5,971		4,523
ENET Holdings, LLC – Term Debt (10.2% Cash, Due 12/2022)^(C)(F)		1,000		1,000		807
ENET Holdings, LLC – Term Debt (10.2% Cash, Due 4/2025)^(C)(F)		29,000		29,000		23,417
R2i Holdings, LLC – Line of Credit, $1,171 available (8.0% Cash, Due 12/2021)^(C)(F)		829		829		790
R2i Holdings, LLC – Term Debt (8.0% Cash, Due 12/2023)^(C)(F)		19,625		19,625		18,693
Vision Government Solutions, Inc. – Line of Credit, $2,500 available (L + 8.8%, 9.8% Cash, Due 12/2022)^(C)		—		—		—
Vision Government Solutions, Inc. – Term Debt (L + 8.8%, 9.8% Cash, Due 12/2022)^(C)		10,100		10,066		10,036

				66,491		58,266
Healthcare, Education, and Childcare – 20.9%
ALS Education, LLC – Line of Credit, $4,000 available (L + 7.5%, 9.0% Cash, Due 5/2025)^(C)		—		—		—
ALS Education, LLC – Term Debt (L + 7.5%, 9.0% Cash, Due 5/2025)^(C)		21,670		21,670		21,562
EL Academies, Inc. – Delayed Draw Term Loan, $0 available (L + 8.0%, 9.0% Cash, Due 8/2022)^(C)		16,000		15,986		15,640
EL Academies, Inc. – Term Debt (L + 8.0%, 9.0% Cash, Due 8/2022)^(C)		12,000		11,983		11,730

				49,639		48,932
Machinery – 2.6%
Arc Drilling Holdings LLC – Line of Credit, $875 available (L + 8.0%, 9.3% Cash, Due 11/2020)^(C)		125		125		121
Arc Drilling Holdings LLC – Term Debt (L + 9.5%, 10.8% Cash, 3.0% PIK, Due 11/2022)^(C)		5,871		5,871		5,689
Precision International, LLC – Line of Credit, $500 available (L + 7.5%, 8.5% Cash, Due 9/2021)^(C)		—		—		—
Precision International, LLC – Term Debt (10.0% Cash, Due 9/2021)^(C)(F)		286		286		277

				6,282		6,087
Printing and Publishing – 0.0%
Chinese Yellow Pages Company – Line of Credit, $0 available (PRIME + 4.0%, 7.3% Cash, Due 2/2015)^(E)(V)		107		107		—

Telecommunications – 11.2%
B+T Group Acquisition, Inc.^(S) – Line of Credit, $0 available (L + 11.0%, 13.0% Cash, Due 12/2021)^(C)(H)		1,200		1,200		1,086
B+T Group Acquisition, Inc.^(S) – Term Debt (L + 11.0%, 13.0% Cash, Due 12/2021)^(C)(H)		6,000		6,000		5,430

NetFortris Corp. – Term Debt (L + 9.0%, 9.5% Cash, Due 2/2021)^(C)		23,302		23,302		19,632

				30,502		26,148


Total Secured First Lien Debt			$	214,013	$	199,860

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS ~~(Continued)~~

SEPTEMBER 30, ~~2017~~2020

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment^(A)(B)(W)(Z)
   Principal/
Shares/
Units^(J)(X)    Cost    Fair
Value
Secured Second Lien Debt – 59.1%

Automobile – 2.2%

Sea Link International IRB, Inc. – Term Debt (11.3%, Due 11/2021)^(C)(F)
   $ 5,000    $ 4,975    $ 5,025
Beverage, Food, and Tobacco – 3.1%

The Mochi Ice Cream Company – Term Debt (L + 10.5%, 11.7% Cash, Due 1/2021)^(C)
   6,750    6,750    6,809
Cargo Transportation– 6.0%

AG Transportation Holdings, LLC. – Term Debt (L + 10.0%, 13.3% Cash, Due 3/2020)^(C)
   13,000    13,000    13,081
Chemicals, Plastics, and Rubber – 0.4%

Vertellus Holdings LLC – Term Debt (L + 12.0%, 13.2% Cash, Due 10/2021)^(D)
   1,099    1,099    929
Diversified/Conglomerate Service – 16.4%

DataPipe, Inc. – Term Debt (L + 8.0%, 9.2% Cash, Due 9/2019)^(D)(Y)
   2,000    1,966    2,005
HB Capital Resources, Ltd. – Term Debt (L + 10.3%, 11.5% Cash, Due 10/2022)^(C)
   22,000    22,000    22,110
Keystone Acquisition Corp.– Term Debt (L + 9.3%, 10.5% Cash, Due 5/2025)^(D)
   4,000    3,922    3,960
LDiscovery, LLC – Term Debt (L + 10.0%, 11.2% Cash, Due 12/2023)^(D)
   5,000    4,815    4,550
PSC Industrial Holdings Corp.– Term Debt (L + 8.3%, 9.5% Cash, Due 12/2021)^(Q)(Y)
   3,500    3,452    3,500




      36,155    36,125
Diversified/Conglomerate Manufacturing – 8.2%

United Flexible, Inc.– Term Debt (L + 9.5%, 10.7% Cash, 2.0% PIK, Due 2/2022)^(C)
   17,993    17,909    17,903
Healthcare, education, and childcare – 8.8%

Medical Solutions Holdings, Inc. – Term Debt (L + 8.3%, 9.5% Cash, Due 12/2023)^(D)
   3,000    2,956    2,970
Merlin International, Inc. – Term Debt (L + 10.0%, 11.2% Cash, Due 8/2022)^(C)
   10,000    10,000    10,150
NetSmart Technologies, Inc.– Term Debt (L + 9.5%, 10.7% Cash, Due 10/2023)^(D)
   3,660    3,609    3,678
New Trident Holdcorp, Inc.– Term Debt (L + 9.5%, 10.7% Cash, Due 7/2020)^(D)
   4,000    4,000    2,412




      20,565    19,210
Home and Office Furnishings, Housewares and Durable Consumer Products – 4.6%

Belnick, Inc. – Term Debt (11.0%, Due 8/2023)^(C)(F)
   10,000    10,000    10,100
Hotels, Motels, Inns, and Gaming – 3.2%

Vacation Rental Pros Property Management, LLC – Term Debt (L + 10.0%, 11.2% Cash, 3.0% PIK, Due 6/2023)^(C)
   7,145    7,145    7,136
Oil and Gas – 5.7%

Francis Drilling Fluids, Ltd. – Term Debt (L + 10.4%, 11.9% PIK, Due 4/2020)^(C)
   16,739    16,611    8,626
Francis Drilling Fluids, Ltd. – Term Debt (L + 9.3% 10.8% PIK, Due 4/2020)^(C)
   7,733    7,673    3,931




      24,284    12,557
Telecommunications – 0.5%

Neustar, Inc. – Term Debt (L + 8.0%, 9.2% Cash, Due 8/2025)^(D)
   1,000    1,000    1,015




Total Secured Second Lien Debt
      $ 142,882    $ 129,890




Unsecured Debt – 1.5%

Healthcare, education, and childcare – 1.5%

Edmentum Ultimate Holdings, LLC – Term Debt (10.0% PIK, Due 6/2020)^(C)(F)
   $ 3,324    $ 3,324    $ 3,324
Preferred Equity – 2.6%

Automobile – 0.1%

Meridian Rack & Pinion, Inc.^(S)– Preferred Stock^(E)(G)
   1,449    $ 1,449    $ 133
Buildings and Real Estate – 0.3%

GFRC Holdings, LLC – Preferred Stock^(E)(G)
   1,000    1,025    824
Diversified/Conglomerate Service – 0.2%

Frontier Financial Group Inc. – Preferred Stock^(I)(G)
   766    500    500
Frontier Financial Group Inc. – Preferred Stock Warrant^(I)(G)
   168    —      —




      500    500
Diversified/Conglomerate Manufacturing – 0.3%

Alloy Die Casting, Co.^(S)– Preferred Stock^(E)(G)
   2,192    2,192    —
United Flexible, Inc.– Preferred Stock^(E)(G)
   538    538    554




      2,730    554
Leisure, Amusement, Motion Pictures, Entertainment – 0.6%

Flight Fit N Fun LLC – Preferred Stock^(G)(Q)(Y)
   700,000    700    1,425


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)		Cost		Fair Value
Secured Second Lien Debt – 72.2%
Automobile – 4.1%
Sea Link International IRB, Inc. – Term Debt (13.3% PIK, Due 3/2023)^(C)(F)	$	10,576	$	10,576	$	9,518

Beverage, Food, and Tobacco – 1.6%
8^th Avenue Food & Provisions, Inc. – Term Debt (L + 7.8%, 7.9% Cash, Due 10/2026)^(D)		3,683		3,704		3,637

Cargo Transportation – 13.1%
AG Transportation Holdings, LLC – Term Debt (L + 10.0%, 13.3% Cash, Due 12/2021)^(C)		13,000		12,973		12,805
American Trailer Rental Group LLC – Term Debt (L + 8.9%, 10.4% Cash, Due 8/2025)^(C)		18,000		18,000		17,820

				30,973		30,625

Chemicals, Plastics, and Rubber – 4.7%
Phoenix Aromas & Essential Oils, LLC – Term Debt (L + 11.5%, 12.5% Cash, Due 5/2024)^(C)		10,012		10,012		9,911
Vertellus Holdings LLC – Term Debt (L + 12.0%, 13.0% Cash, Due 7/2022)^(C)		1,099		1,099		1,099

				11,111		11,010

Diversified/Conglomerate Manufacturing – 13.7%
Magpul Industries Corp. – Term Debt (L + 11.5%, 12.5% Cash, Due 5/2026)^(C)		28,000		28,000		28,000
Tailwind Smith Cooper Intermediate Corporation – Term Debt (L + 9.0%, 9.1% Cash, Due 5/2027)^(D)		5,000		4,776		3,887

				32,776		31,887

Diversified/Conglomerate Service – 14.9%
CHA Holdings, Inc. – Term Debt (L + 8.8%, 9.8% Cash, Due 4/2026)^(D)(U)		3,000		2,953		2,700
Drive Chassis Holdco, LLC – Term Debt (L + 8.3%, 8.4% Cash, Due 4/2026)^(D)		5,000		4,786		4,787

Gray Matter Systems, LLC – Term Debt (12.0% Cash, Due 11/2023)^(C)(F)		11,100		11,100		10,906
Keystone Acquisition Corp. – Term Debt (L + 9.3%, 10.3% Cash, Due 5/2025)^(D)(U)		4,000		3,945		3,300

Prophet Brand Strategy – Delayed Draw Term Loan, $5,000 available (L + 8.5%, 10.5% Cash, Due 2/2025)^(C)		—		—		—
Prophet Brand Strategy – Term Debt (L + 8.5%, 10.5% Cash, Due 2/2025)^(C)		13,000		13,000		12,984

				35,784		34,677
Healthcare, Education, and Childcare – 2.3%
Medical Solutions Holdings, Inc. – Term Debt (L + 8.4%, 9.4% Cash, Due 6/2025)^(D)		3,000		2,969		2,700

Medical Solutions Holdings, Inc. – Term Debt (L + 8.8%, 9.8% Cash, Due 6/2025)^(D)		3,000		2,948		2,760

				5,917		5,460
Home and Office Furnishings, Housewares and Durable Consumer Products – 4.1%

Belnick, Inc. – Term Debt (11.0% Cash, Due 8/2023)^(C)(F)		10,000		10,000		9,675

Hotels, Motels, Inns, and Gaming – 3.4%
Vacation Rental Pros Property Management, LLC – Term Debt (L + 10.0%, 11.0% Cash, 3.0% PIK, Due 6/2023)^(C)		8,052		8,052		8,052

Machinery – 0.4%
CPM Holdings, Inc. – Term Debt (L + 8.3%, 8.4% Cash, Due 11/2026)^(D)		1,000		1,000		910

Oil and Gas – 9.9%
Imperative Holdings Corporation – Term Debt (L + 10.3%, 12.3% Cash, 1.8% PIK, Due 9/2022)^(C)		27,583		27,583		23,170

Total Secured Second Lien Debt			$	177,476	$	168,621

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS ~~(Continued)~~

SEPTEMBER 30, ~~2017~~2020

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment^(A)(B)(W)(Z)
   Principal/
Shares/
Units^(J)(X) Cost    Fair
Value
Oil and Gas – 0.9%

Francis Drilling Fluids, Ltd. – Preferred Equity Units^(E)(G)


1,656

1,215    —
WadeCo. Specialties, Inc. – Preferred Stock^(E)(G)
   1,000 618    2,000




   1,833    2,000
Personal andNon-Durable Consumer Products (Manufacturing Only) – 0.1%

Funko Acquisition Holdings, LLC^(S) – Preferred Equity Units^(E)(G)
   260 167    159
Telecommunications – 0.1%

B+T Group Acquisition, Inc.^(S) – Preferred Stock^(E)(G)(J)
   5,503 1,799    140




Total Preferred Equity
   $ 10,203    $ 5,735




Common Equity – 2.0%

Aerospace and Defense – 0.3%

FedCap Partners, LLC – Class A Membership Units ($0 Uncalled Commitment)^(G)(K)(R)
   80 $ 1,634    $ 751
Automobile– 0.2%

Sea Link International IRB, Inc.– Common Equity Units^(E)(G)
   494,902 495    362
Beverage, Food, and Tobacco – 0.2%

The Mochi Ice Cream Company – Common Stock^(E)(G)
   450 450    —
Triple H Food Processors, LLC – Common Stock^(E)(G)
   250,000 250    366




   700    366
Buildings and Real Estate – 0.0%

GFRC Holdings, LLC – Common Stock Warrants^(E)(G)
   45.0 % —      —
Cargo Transportation – 0.0%

AG Transportation Holdings, LLC – Member Profit Participation^(E)(G)
   18.0 % 1,000    —
AG Transportation Holdings, LLC – Profit Participation Warrants^(E)(G)
   12.0 % 244    —




   1,244    —
Chemicals, Plastics, and Rubber – 0.2%

Vertellus Holdings LLC – Common Stock Units^(E)(G)
   879,121 3,018    442
Diversified/Conglomerate Manufacturing – 0.0%

Alloy Die Casting, Co.^(S) – Common Stock^(E)(G)
   270 18    —
United Flexible, Inc. – Common Stock^(E)(G)
   1,158 148    —




   166    —
Healthcare, education, and childcare – 0.9%

Edmentum Ultimate Holdings, LLC – Common Stock^(E)(G)
   21,429 2,636    —
EL Academies, Inc. – Common Stock^(G)(I)
   500 500    500
Leeds Novamark Capital I, L.P. – Limited Partnership Interest ($1,581 uncalled capital commitment)^(G)(L)(R)
   3.5 % 1,628    1,645




   4,764    2,145
Machinery – 0.0%

Precision International, LLC – Membership Unit Warrant^(E)(G)
   33.3 % —      —
Oil and Gas – 0.1%

Francis Drilling Fluids, Ltd. – Common Equity Units^(E)(G)
   1,656 1    —
W3, Co. – Common Equity^(D)(G)
   435 499    139




   500    139
Personal andNon-Durable Consumer Products (Manufacturing Only) – 0.1%

Canopy Safety Brands, LLC – Participation Warrant^(E)(G)
   1 500    259
Funko Acquisition Holdings, LLC^(S) – Common Stock^(E)(G)
   975 —      —




   500    259
Telecommunications – 0.0%

NetFortris Corp.– Common Stock Warrant^(E)(G)
   1 1    —




Total Common Equity
   $ 13,022    $ 4,464




TotalNon-Control/Non-Affiliate Investments
   $ 318,952    $ 290,860


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)			Cost		Fair Value
Unsecured Debt – 1.8%
Diversified/Conglomerate Service – 0.0%
Frontier Financial Group Inc. – Convertible Debt (6.0%, Due 6/2022)^(E)(F)	$	198		$	198	$	17

Healthcare, education, and childcare – 1.8%
Edmentum Ultimate Holdings, LLC – Term Debt (10.0% PIK, Due 12/2021)^(C)(F)		4,415			4,415		4,282


Total Unsecured Debt				$	4,613	$	4,299


Preferred Equity – 2.0%
Beverage, Food, and Tobacco – 0.0%
Triple H Food Processors, LLC – Preferred Stock^(E)(G)		75			75		83

Buildings and Real Estate – 0.6%
GFRC 360, LLC – Preferred Stock^(E)(G)		1,000			1,025		1,456

Diversified/Conglomerate Service – 0.0%
Frontier Financial Group Inc. – Preferred Stock^(E)(G)		766			500		—
Frontier Financial Group Inc. – Preferred Stock Warrant^(E)(G)		168			—		—

					500		—
Oil and Gas – 0.6%
FES Resources Holdings LLC – Preferred Equity Units^(E)(G)		6,350			6,350		—
Imperative Holdings Corporation – Preferred Equity Units^(E)(G)		13,740			632		1,292

					6,982		1,292
Telecommunications – 0.8%
B+T Group Acquisition, Inc.^(S) – Preferred Stock^(E)(G)		6,130			2,024		—
NetFortris Corp. – Preferred Stock^(E)(G)		7,890,860			789		1,846

					2,813		1,846

Total Preferred Equity				$	11,395	$	4,677


Common Equity – 10.1%
Aerospace and Defense – 1.8%
Antenna Research Associates, Inc. – Common Equity Units^(E)(G)		4,283		$	4,283	$	4,138

Automobile– 0.1%
Sea Link International IRB, Inc.– Common Equity Units^(E)(G)		823,333			823		208

Beverage, Food, and Tobacco – 0.0%
Triple H Food Processors, LLC – Common Stock^(E)(G)		250,000			250		—

Buildings and Real Estate – 0.0%
GFRC 360, LLC – Common Stock Warrants^(E)(G)		45.0	%		—		—

Cargo Transportation – 1.7%
AG Transportation Holdings, LLC – Member Profit Participation^(E)(G)		27.0	%		1,350		2,345
AG Transportation Holdings, LLC – Profit Participation Warrants^(E)(G)		5.0	%		244		563
American Trailer Rental Group LLC – Common Stock^(E)(G)		6,667			1,000		1,009

					2,594		3,917
Chemicals, Plastics, and Rubber – 1.2%
Vertellus Holdings LLC – Common Stock Units^((E)(G)		879,121			3,018		2,705

Healthcare, Education, and Childcare – 2.3%
Edmentum Ultimate Holdings, LLC – Common Stock^(E)(G)		21,429			2,637		—
GSM MidCo LLC – Common Stock^(E)(G)		767			767		763
Leeds Novamark Capital I, L.P. – Limited Partnership Interest ($843 uncalled capital commitment)^(G)(L)(R)		3.5	%		1,808		4,718

					5,212		5,481
Machinery – 0.4%
Arc Drilling Holdings LLC – Common Stock^(E)(G)		15,000			1,500		400
Precision International, LLC – Membership Unit Warrant^(E)(G)		33.3	%		—		525

					1,500		925

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS ~~(Continued)~~

SEPTEMBER 30, ~~2017~~2020

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment^(A)(B)(W)(Z)
   Principal/
Shares/
Units^(J)(X)    Cost    Fair Value
AFFILIATE INVESTMENTS^(N)– 19.4%

Secured First Lien Debt – 8.6%

Diversified/Conglomerate Manufacturing – 8.6%

Edge Adhesives Holdings, Inc.^(S) – Term Debt (L + 10.5%, 12.5% Cash, Due 2/2019)^(C)
   $ 6,200    $ 6,200    $ 5,704
Edge Adhesives Holdings, Inc.^(S) – Term Debt (L + 11.8%, 13.8% Cash, Due 2/2019)^(C)
   1,600    1,600    1,480
LWO Acquisitions Company LLC – Line of Credit, $0 available (L + 5.5%, 6.7% Cash, 2.0% PIK, Due 3/2018)^(C)
   2,748    2,746    2,336
LWO Acquisitions Company LLC – Term Debt (L + 8.5%, 9.7% Cash, 2.0% PIK, Due 12/2019)^(C)
   10,942    10,921    9,301




      21,467    18,821




Total Secured First Lien Debt
      $ 21,467    $ 18,821




Secured Second Lien Debt – 7.8%

Diversified Natural Resources, Precious Metals and Minerals – 7.8%

Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 2/2021)^(C)
   $ 6,000    $ 6,000    $ 5,998
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 2/2021)^(C)
   8,000    8,000    7,997
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 2/2021)^(C)
   3,300    3,300    3,299




      17,300    17,294




Total Secured Second Lien Debt
      $ 17,300    $ 17,294




Preferred Equity – 0.4%

Diversified/Conglomerate Manufacturing – 0.0%

Edge Adhesives Holdings, Inc.^(S) – Preferred Stock^(E)(G)
   2,516    $ 2,516    $ —
Diversified Natural Resources, Precious Metals and Minerals – 0.4%

Lignetics, Inc. – Preferred Stock^(E)(G)
   40,000    800    826




Total Preferred Equity
      $ 3,316    $ 826




Common Equity – 2.6%

Diversified/Conglomerate Manufacturing – 0.0%

LWO Acquisitions Company LLC – Common Units^(E)(G)
   921,000    $ 921    $ —
Diversified Natural Resources, Precious Metals and Minerals – 0.4%

Lignetics, Inc. – Common Stock^(E)(G)
   152,603    1,855    828
Textiles and Leather – 2.2%

Targus Cayman HoldCo, Ltd. – Common Stock^(E)(G)
   3,076,414    5,009    4,879




Total Common Equity
      $ 7,785    $ 5,707




Total Affiliate Investments
      $ 49,868    $ 42,648




CONTROL INVESTMENTS^(O) – 8.6%

Secured First Lien Debt – 3.5%

Machinery – 1.8%

PIC 360, LLC – Term Debt (14.0%, Due 12/2017)^(E)(F)
   $ 4,000    $ 4,000    $ 4,000
Printing and Publishing – 1.7%

Sunshine Media Holdings – Line of Credit, $672 available (8.0% Cash, Due 5/2018)^(E)(F)
   1,328    1,328    1,328
Sunshine Media Holdings – Term Debt (8.0% Cash, Due 5/2018)^(E)(F)(H)
   5,000    3,525    679
Sunshine Media Holdings – Term Debt (L + 3.8%, 5.0% Cash, Due 5/2018)^(E)(H)
   11,948    8,401    1,621
Sunshine Media Holdings – Term Debt (L + 4.0%, 5.5% Cash, Due 5/2018)^(E)(H)
   10,700    10,700    —




      23,954    3,628




Total Secured First Lien Debt
      $ 27,954    $ 7,628




Secured Second Lien Debt – 3.7%

Automobile – 3.7%

Defiance Integrated Technologies, Inc. – Term Debt (L + 9.5%, 11.0% Cash, Due 2/2019)^(E)
   $ 8,065    $ 8,065    $ 8,065


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)			Cost		Fair Value
Oil and Gas – 0.1%
FES Resources Holdings LLC – Common Equity Units^(E)(G)		6,233			—		—
Total Safety Holdings, LLC – Common Equity^(E)(G)		435			499		263

					499		263
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
Funko Acquisition Holdings, LLC^(S) – Common Units^(G)(T)		12,180			59		48

Telecommunications – 0.0%
B+T Group Acquisition, Inc.^(S) – Common Stock Warrant^(E)(G)		1.5	%		—		—
NetFortris Corp. – Common Stock Warrant^(E)(G)		1			1		—

					1		—

Textiles and Leather – 2.5%
Targus Cayman HoldCo, Ltd. – Common Stock^(E)(G)		3,076,414			2,062		5,905

Total Common Equity				$	20,301	$	23,590

Total Non-Control/Non-Affiliate Investments				$	427,798	$	401,047


AFFILIATE INVESTMENTS^(N)– 14.2%
Secured First Lien Debt – 3.7%
Diversified/Conglomerate Manufacturing – 3.7%
Edge Adhesives Holdings, Inc.^(S) – Line of Credit, $0 available (L + 8.0%, 10.0% Cash, Due 12/2020)^(C)	$	680		$	680	$	663

Edge Adhesives Holdings, Inc.^(S) – Term Debt (L + 10.5%, 12.5% Cash, Due 2/2022)^(C)		6,200			6,200		6,045

Edge Adhesives Holdings, Inc.^(S) – Term Debt (L + 11.8%, 13.8% Cash, Due 2/2022)^(C)		2,000			2,000		1,950


					8,880		8,658

Total Secured First Lien Debt				$	8,880	$	8,658


Secured Second Lien Debt – 8.7%
Diversified Natural Resources, Precious Metals and Minerals – 8.7%
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025)^(C)	$	6,000		$	6,000	$	6,000
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025)^(C)		8,000			8,000		8,000
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025)^(C)		3,300			3,300		3,300
Lignetics, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025)^(C)		3,000			3,000		3,000

					20,300		20,300

Total Secured Second Lien Debt				$	20,300	$	20,300


Preferred Equity – 0.9%
Diversified/Conglomerate Manufacturing – 0.0%
Edge Adhesives Holdings, Inc.^(S) – Preferred Stock^(E)(G)		5,466		$	5,466	$	—

Diversified Natural Resources, Precious Metals and Minerals – 0.7%
Lignetics, Inc. – Preferred Stock^(E)(G)		68,880			1,321		1,562
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.2%
Canopy Safety Brands, LLC – Preferred Stock^(E)(G)		500,000			500		507

Total Preferred Equity				$	7,287	$	2,069


Common Equity – 0.9%
Diversified Natural Resources, Precious Metals and Minerals – 0.9%
Lignetics, Inc. – Common Stock^(E)(G)		152,603		$	1,855	$	2,152

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
Canopy Safety Brands, LLC – Common Stock^(E)(G)		500,000			—		—

Total Common Equity				$	1,855	$	2,152

Total Affiliate Investments				$	38,322	$	33,179

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

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS ~~(Continued)~~

SEPTEMBER 30, ~~2017~~2020

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment^(A)(B)(W)(Z)
   Principal/
Shares/
Units^(J)(X)    Cost    Fair
Value
Preferred Equity – 0.0%

Printing and Publishing – 0.0%

Sunshine Media Holdings – Preferred Stock^(E)(G)(J)
   15,270    $ 5,275    $ —
Common Equity – 1.4%

Automobile– 1.3%

Defiance Integrated Technologies, Inc. – Common Stock^(E)(G)
   33,321    $ 580    $ 2,856
Machinery – 0.1%

PIC 360, LLC – Common Equity Units^(E)(G)
   1    1    316
Printing and Publishing – 0.0%

Sunshine Media Holdings – Common Stock^(E)(G)
   1,867    740    —
Sunshine Media Holdings – Common Stock Warrants^(E)(G)
   72    —      —




      740    —




Total Common Equity
      $ 1,321    $ 3,172




Total Control Investments
      $ 42,615    $ 18,865




TOTAL INVESTMENTS^(T) – 160.4%
      $ 411,435    $ 352,373


Company and Investment^(A)(B)(W)(Y)	Principal/ Shares/ Units^(J)(X)		Cost		Fair Value
CONTROL INVESTMENTS^(O) – 6.9%
Secured First Lien Debt – 2.1%
Diversified/Conglomerate Manufacturing – 1.5%
LWO Acquisitions Company LLC – Term Debt (L + 7.5%, 10.0% Cash, Due 6/2021)^(E)	$	6,000	$	6,000	$	3,450
LWO Acquisitions Company LLC – Term Debt (Due 6/2021)^(E)(P)		10,632		10,632		—

				16,632		3,450
Printing and Publishing – 0.6%
TNCP Intermediate HoldCo, LLC – Line of Credit, $500 available (8.0% Cash, Due 9/2021)^(E)(F)		1,500		1,483		1,500

Total Secured First Lien Debt			$	18,115	$	4,950


Secured Second Lien Debt – 3.5%
Automobile– 3.5%
Defiance Integrated Technologies, Inc. – Term Debt (L + 9.5%, 11.0% Cash, Due 5/2026)^(E)	$	8,065	$	8,065	$	8,065

Unsecured Debt – 0.0%
Diversified/Conglomerate Manufacturing – 0.0%
LWO Acquisitions Company LLC – Term Debt (Due 6/2023)^(E)(P)	$	95	$	95	$	—

Preferred Equity – 0.1%
Automobile– 0.1%
Defiance Integrated Technologies, Inc. – Preferred Stock^(E)(G)		6,043	$	250	$	254

Common Equity – 1.2%
Automobile– 0.0%
Defiance Integrated Technologies, Inc. – Common Stock^(E)(G)		33,321	$	580	$	104

Diversified/Conglomerate Manufacturing – 0.0%
LWO Acquisitions Company LLC – Common Units^(E)(G)		921,000		921		—

Machinery – 1.0%
PIC 360, LLC – Common Equity Units^(E)(G)		750		1		2,342

Printing and Publishing – 0.2%
TNCP Intermediate HoldCo, LLC – Common Equity Units^(E)(G)		790,000		500		459

Total Common Equity			$	2,002	$	2,905

Total Control Investments			$	28,527	$	16,174

TOTAL INVESTMENTS^)(Z) – 192.7%			$	494,647	$	450,400

^(A)

Certain of the securities listed in this schedule are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, totaling ~~$317.4~~$412.5 million at fair value, are pledged as collateral tounder our revolving line of credit, as described further in Note 5—~~Borrowings.~~Borrowings in the accompanying Notes to Consolidated Financial Statements. Under the Investment Company Act of 1940 as amended, (the “1940 Act”), we may not acquire anynon-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. As of September 30, ~~2017,~~2020, our investments in ~~FedCap~~Leeds Novamark Capital I, L.P. (“Leeds”) and ~~Leeds~~Funko Acquisition Holdings, LLC (“Funko”) are considerednon-qualifying assets under Section 55 of the 1940 Act. Suchnon-qualifying assets represent ~~0.7%~~1.1% of total investments, at fair value, as of September 30, ~~2017.~~2020.

^(B)

Unless indicated otherwise, all cash interest rates are indexed to30-day London Interbank Offered Rate (“LIBOR” or “L”), which was ~~1.23%~~0.15% as of September 30, ~~2017.~~2020. If applicable,paid-in-kind (“PIK”) interest rates are noted separately from the cash interest rate. Certain securities are subject to an interest rate floor. The cash interest rate is the greater of the floor or LIBOR plus a spread. Due dates represent the contractual maturity date.

^(C)	Fair value was based on an internal yield analysis or on estimates of value submitted by ~~Standard & Poor’s Securities Evaluations, Inc.~~ICE Data Pricing and Reference Data, LLC (“~~SPSE”~~ICE”).

^(D)	Fair value was based on the indicative bid price on or near September 30, ~~2017,~~2020, offered by the respective syndication agent’s trading desk.

^(E)	Fair value was based on the total enterprise value of the portfolio company, which was then allocated to the portfolio company’s securities in order of their relative priority in the capital structure.

^(F)	Debt security has a fixed interest rate.

^(G)	Security isnon-income producing.

^(H)	Debt security is onnon-accrual status.

^(I)	~~New investment valued at cost, as it was determined that the price paid during the quarter ended September 30, 2017 best represents fair value as of September 30, 2017.~~ Reserved.

^(J)

^(K)	~~There are certain limitations on our ability to transfer our units owned, withdraw or resign prior to dissolution of the entity, which must occur no later than May 3, 2020.~~ Reserved.

^(L)	There are certain limitations on our ability to withdraw our partnership interest prior to dissolution of the entity, which must occur no later than May 9, 2024 or two years after all outstanding leverage has matured.

^(M)	Non-Control/Non-Affiliate investments, as defined by the 1940 Act, are those that are neither Control nor Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.

^(N)	Affiliate investments, as defined by the 1940 Act, are those in which we own, with the power to vote, between and inclusive of 5.0% and 25.0% of the issued and outstanding voting securities.

^(O)	Control investments, as defined by the 1940 Act, are those where we have the power to exercise a controlling influence over the management or policies of the portfolio company, which may include owning, with the power to vote, more than 25.0% of the issued and outstanding voting securities.

^(P)	Debt security does not have a stated interest rate that is payable thereon.

^(Q)	~~Fair value was based on the expected exit or payoff amount, where such event has occurred or is expected to occur imminently.~~ Reserved.

^(R)	Fair value was based on net asset value provided by the fund as a practical expedient.

^(S)	One of our affiliated funds, Gladstone Investment Corporation,co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S. Securities and Exchange Commission.

^(T)

Cumulative gross unrealized depreciation for federal income tax purposes is $71.7 million; cumulative gross unrealized appreciation for federal income tax purposes is $7.5 million. Cumulative net unrealized depreciation is $64.3 million,

Our investment in Funko was valued using Level 2 inputs within the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) fair value hierarchy. Our common units in Funko are convertible to class A common stock in Funko, Inc. upon meeting certain requirements. Fair value was based on the closing market price of shares of Funko, Inc. as of the reporting date, less a ~~tax cost~~discount for lack of ~~$416.6 million.~~marketability. Funko, Inc. is traded on the Nasdaq Global Select Market under the trading symbol “FNKO.” Refer to Note 3—Investments in the accompanying Notes toConsolidated Financial Statements for additional information.

^(U)	The cash interest rate on this investment was indexed to90-day LIBOR, which was ~~1.33%~~0.23% as of September 30, ~~2017.~~2020.

^(V)	The cash interest rate on this investment was indexed to the U.S. Prime Rate (“PRIME”), which was ~~4.25%~~3.25% as of September 30, ~~2017.~~2020.

^(W)

^(X)	Represents the principal balance for debt investments and the number of shares/units held for equity investments. Warrants are represented as a percentage of ownership, as applicable.

^(Y)	~~Investment was exited subsequent to September 30, 2017. Refer to Note 15—~~~~Subsequent Events~~~~in the accompanying~~ ~~Notes to Consolidated Financial Statements~~ ~~for additional information.~~

^(Z)	Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of September 30, ~~2017.~~2020.

^(Z)	Cumulative gross unrealized depreciation for federal income tax purposes is $68.3 million; cumulative gross unrealized appreciation for federal income tax purposes is $13.4 million. Cumulative net unrealized depreciation is $54.9 million, based on a tax cost of $504.9 million.

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

GLADSTONE CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

DECEMBER 31, ~~2017~~2020

(DOLLAR AMOUNTS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA AND AS OTHERWISE INDICATED)

NOTE 1. ORGANIZATION

Gladstone Capital Corporation was incorporated under the Maryland General Corporation Law on May 30, 2001 and completed an initial public offering on August 24, 2001. The terms “the Company,” “we,” “our” and “us” all refer to Gladstone Capital Corporation and its consolidated subsidiaries. We are an externally managed,closed-end,non-diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), and isare applying the guidance of the Financial Accounting Standards Board ~~(the “FASB”~~(“FASB”) Accounting Standards Codification (“ASC”) Topic 946~~Financial~~ “Financial Services-Investment ~~Companies~~(“Companies” (“ASC 946”). In addition, we have elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”). We were established for the purpose of investing in debt and equity securities of established private businesses operating in the United States (“U.S.”). Our investment objectives are to: (1) achieve and grow current income by investing in debt securities of established lower middle market companies (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $3 million to $15 million) in the U.S. that we believe will provide stable earnings and cash flow to pay expenses, make principal and interest payments on our outstanding indebtedness and make distributions to stockholders that grow over time; and (2) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities of established businesses that we believe can grow over time to permit us to sell our equity investments for capital gains.

Gladstone Business Loan, LLC (“Business Loan”), a wholly-owned subsidiary of ours, was established on February 3, 2003, for the sole purpose of ~~owning a portion of our portfolio of~~holding certain investments ~~in connection with~~pledged as collateral to our line of credit. The financial statements of Business Loan are consolidated with ~~ours.~~those of Gladstone Capital Corporation. We also have significant subsidiaries (as defined under Rule1-02(w) of the U.S. Securities and Exchange Commission’s (“SEC”) RegulationS-X) whose financial statements are not consolidated with ours. Refer to Note 12 ~~–Unconsolidated~~– Unconsolidated Significant Subsidiaries for additional information regarding our unconsolidated significant subsidiaries.

We are externally managed by Gladstone Management Corporation (the “Adviser”), ~~a Delaware corporation~~an affiliate of ours and an SEC registered investment adviser, ~~and an affiliate of ours,~~ pursuant to an investment advisory and management agreement ~~(the~~(as amended and/or restated from time to time, the “Advisory Agreement”). Administrative services are provided by ~~our affiliate,~~ Gladstone Administration, LLC (the “Administrator”), ~~a Delaware limited liability company,~~an affiliate of ours and the Adviser, pursuant to an administration agreement (the “Administration Agreement”). Refer to Note 4—Related Party Transactions for additional information regarding these arrangements.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements and Basis of Presentation

We prepare our interim financial statements in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and pursuant to the requirements for reporting onForm 10-Q and Articles 6, 10 and 1012 of RegulationS-X. Accordingly, we have not included in this quarterly report all of the information and notes required by GAAP for annual financial statements. The accompanyingConsolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. In accordance with Article 6 of RegulationS-X, we do not consolidate portfolio company investments. Under the investment company rules and regulations pursuant to the American Institute of Certified Public Accountants ~~(“AICPA”)~~ Audit and Accounting Guide for Investment Companies, codified in ASC 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries. In our opinion, all adjustments, consisting solely of normal recurring accruals, necessary for the fair statement of financial statements for the interim periods have been included. The results of operations for the three months ended December 31, ~~2017,~~2020 are not necessarily indicative of results that ultimately may be achieved for the fiscal ~~year.~~year ending September 30, 2021 or any future interim periods. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form10-K for the fiscal year ended September 30, ~~2017,~~2020, as filed with the SEC on November ~~20, 2017.~~

~~Our accompanying fiscalyear-end~~~~Consolidated Statement of Assets and Liabilities~~ ~~was derived from audited financial statements, but does not include all disclosures required by GAAP.~~10, 2020.

Use of Estimates

Preparing financial statements requires management to make estimates and assumptions that affect the amounts reported in our accompanying Consolidated Financial Statements and ~~accompanying notes.~~these Notes to Consolidated Financial Statements. Actual results may differ from those estimates.

~~Reclassifications~~

Certain prior period amounts have been reclassified to conform to the current period presentation in the Consolidated Financial Statements and the accompanying notes. Reclassifications did not impact net increase in net assets resulting from operations, total assets, total liabilities or total net assets, or Statement of Changes in Net Assets and Statement of Cash Flows classifications.

Investment Valuation Policy

Accounting Recognition

We record our investments at fair value in accordance with the FASB ~~Accounting Standards Codification~~ASC Topic 820, “~~Fair~~“Fair Value Measurements and Disclosures” (“ASC 820”) and the 1940 Act. Investment transactions are recorded on the trade date. Realized gains or losses are generally measured by the difference between the net proceeds from the repayment or sale and ~~amortized~~the cost basis of the investment, without regard to unrealized ~~depreciation~~appreciation or ~~appreciation~~depreciation previously recognized, and include investments charged off during the period, net of recoveries. Unrealized ~~depreciation~~appreciation or ~~appreciation~~depreciation primarily reflects the change in investment fair values, including the reversal of previously recorded unrealized ~~depreciation~~appreciation or ~~appreciation~~depreciation when gains or losses are realized.

Board Responsibility

In accordance with the 1940 Act, our Board of Directors has the ultimate responsibility for reviewing and ~~approving,~~determining, in good faith, the fair value of our investments for which market quotations are not readily available based on our investment valuation policy ~~which~~(which has been approved by our Board of ~~Directors~~Directors) (the “Policy”). Such review occurs in three phases. First, prior to its quarterly meetings, ~~our~~the Board of Directors receives written valuation recommendations and supporting materials provided by professionals of the Adviser and Administrator with oversight and direction from ~~our~~the chief valuation officer ~~who reports directly to our Board of Directors~~ (the “Valuation Team”). Second, the Valuation Committee of our Board of Directors ~~comprised~~(comprised entirely of independent ~~directors,~~directors) meets to review the valuation recommendations and supporting materials presented by the chief valuation officer. Third, after the Valuation Committee concludes its meeting, it and ~~our~~the chief valuation officer present the Valuation Committee’s findings to the entire Board of Directors ~~and, after discussion,~~so that the full Board of Directors ~~ultimately approves~~may review and determine in good faith the fair value of ~~our portfolio of~~such investments in accordance with the Policy.

There is no single ~~method~~standard for determining fair value (especially for privately-held businesses), as fair value depends upon the specific facts and circumstances of each individual investment. In determining the fair value of our investments, the Valuation Team, led by ~~our~~the chief valuation officer, uses the Policy, and each quarter the Valuation Committee and Board of Directors ~~reviews~~review the Policy to determine if changes thereto are advisable and ~~also reviews~~ whether the Valuation Team has applied the Policy consistently.

Use of Third Party Valuation Firms

The Valuation Team engages third party valuation firms to provide independent assessments of fair value of certain of our investments.

~~Standard & Poor’s Securities Evaluation, Inc.~~ICE Data Pricing and Reference Data, LLC (“~~SPSE”~~ICE”), a valuation specialist, generally provides estimates of fair value on our proprietary debt investments. The Valuation Team ~~in accordance with the Policy,~~ generally assigns ~~SPSE’s~~ICE’s estimates of fair value to our debt investments where we do not have the ability to effectuate a sale of the applicable portfolio company. The Valuation Team corroborates ~~SPSE’s~~ICE’s estimates of fair value using one or more of the valuation techniques discussed below. The Valuation Team’s estimate of value on a specific debt investment may significantly differ from ~~SPSE’s.~~ICE’s. When this occurs, ~~the~~our Valuation Committee and Board of Directors review whether the Valuation Team has followed the Policy and whether the Valuation Team’s recommended fair value is reasonable in light of the Policy and other facts and circumstances ~~and then votes to accept or reject the Valuation Team’s recommended~~before determining fair value.

We may engage other independent valuation firms to provide earnings multiple ranges, as well as other information, and evaluate such information for incorporation into the total enterprise value (“TEV”) of certain of our investments. Generally, at least once per year, we engage an independent valuation firm to value or review ~~our~~the valuation of each of our significant equity investments, which includes providing the information noted above. The Valuation Team evaluates such information for incorporation into our ~~total enterprise value,~~TEV, including review of all inputs provided by the independent valuation firm. The Valuation Team then makes a recommendation to our Valuation Committee and Board of Directors as to the fair value. Our Board of Directors reviews the recommended fair value, and whether it is reasonable in light of the Policy, ~~as well as~~and other relevant facts and circumstances ~~and then votes to accept or reject the Valuation Team’s recommended~~before determining fair value.

Valuation Techniques

In accordance with ASC 820, the Valuation Team uses the following techniques when valuing our investment portfolio:

•

Total Enterprise Value — In determining the fair value using a ~~total enterprise value (“TEV”),~~TEV, the Valuation Team first calculates the TEV of the portfolio company by incorporating some or all of the following factors: the portfolio company’s ability to make payments and other specific portfolio company attributes; the earnings of the portfolio

company (the trailing or projected twelve month revenue or ~~earnings before interest, taxes, depreciation and amortization (“EBITDA”))~~EBITDA); EBITDA ~~or revenue multiples~~ obtained from our indexing methodology whereby the original transaction EBITDA ~~or revenue multiple~~ at the time of our closing is indexed to a general subset of comparable disclosed transactions and EBITDA ~~or revenue multiples~~ from recent sales to third parties of similar securities in similar industries; a comparison to publicly traded securities in similar industries, ~~inputs provided by an independent valuation firm, if any,~~ and other pertinent factors. The Valuation Team generally reviews industry statistics and may use outside experts when gathering this information. Once the TEV is determined for a portfolio company, the Valuation Team generally allocates the TEV to the portfolio company’s securities based on the facts and circumstances of the securities, which typically results in the allocation of fair value to securities based on the order of their relative priority in the capital structure. Generally, the Valuation Team uses TEV to value our equity investments and, in the circumstances where we have the ability to effectuate a sale of a portfolio company, our debt investments.

TEV is primarily calculated using ~~EBITDA or revenue multiples;~~EBITDA; however, TEV may also be calculated using revenue multiples or a discounted cash flow (“DCF”) analysis whereby future expected cash flows of the portfolio company are discounted to determine a net present value using estimated risk-adjusted discount rates, which incorporate adjustments for nonperformance and liquidity risks. Generally, the Valuation Team uses ~~the~~a DCF analysis to calculate ~~the~~ TEV to corroborate estimates of value for our equity investments where we do not have the ability to effectuate a sale of a portfolio company or for debt of credit impaired portfolio companies.

•

Yield Analysis — The Valuation Team generally determines the fair value of our debt investments ~~(where~~for which we do not have the ability to effectuate a sale of athe applicable portfolio ~~company)~~company using the yield analysis, which includes a DCF calculation and assumptions that the Valuation Team believes market participants would use, including, ~~but not limited to,~~ estimated remaining life, current market yield, current leverage, and interest rate spreads. This technique develops a modified discount rate that incorporates risk premiums including ~~among other things,~~ increased probability of default, increased loss upon default and increased liquidity risk. Generally, the Valuation Team uses the yield analysis to corroborate both estimates of value provided by ~~SPSE~~ICE and market quotes.

•

Market Quotes — For our ~~syndicate~~ investments for which a limited market exists, we generally base fair value ~~is generally based~~ on readily available and reliable market quotations which are corroborated by the Valuation Team (generally by using the yield analysis explained above). In addition, the Valuation Team assesses trading activity for similar ~~syndicated~~ investments and evaluates variances in quotations and other market insights to determine if any available quoted prices are reliable. Typically, the Valuation Team uses the lower indicative bid price (“IBP”) in thebid-to-ask price range obtained from the respective originating syndication agent’s trading desk on or near the valuation date. The Valuation Team may take further steps to consider additional information to validate that price in accordance with the Policy. For securities that are publicly traded, we generally base fair value on the closing market price of the securities we hold as of the reporting date. For restricted securities that are publicly traded, we generally base fair value on the closing market price of the securities we hold as of the reporting date less a discount for the restriction, which includes consideration of the nature and term to expiration of the restriction.

•

Investments in Funds — For equity investments in other funds ~~where~~for which we cannot effectuate a sale of the fund, the Valuation Team generally determines the fair value ~~of our uninvested capital at par value and~~ of our invested capital at the net asset value (“NAV”) provided by the fund. Any invested capital that is not yet reflected in the NAV provided by the fund is valued at par value. The Valuation Team may also determine fair value of our investments in other investment funds based on the capital accounts of the underlying entity.

In addition to the ~~above~~ valuation techniques listed above, the Valuation Team may also consider other factors when determining the fair ~~values~~value of our investments, ~~including, but not limited to:~~including: the nature and realizable value of the collateral, including external parties’ ~~guaranties;~~guaranties, any relevant offers or letters of intent to acquire the portfolio ~~company;~~company, timing of expected loan ~~repayments;~~repayments, and the markets in which the portfolio company operates. ~~If applicable, new andfollow-on~~ debt and equity investments made during the current reporting quarter are generally valued at our original cost basis, as near-measurement date transaction value is a reasonable indicator of fair value.

Fair value measurements of our investments may involve subjective judgments and estimates and due to the uncertainty inherent ~~uncertainty~~in valuing these securities, the determinations of ~~determining these fair values, the~~ fair value ~~of our investments~~ may fluctuate from period to period and may differ materially from the values that could be obtained if a ready market for these securities existed. Our NAV could be materially affected if the determinations regarding the fair value of our investments are materially different from the values that we ultimately realize upon our ~~exit~~disposal of such securities. Additionally, changes in the market environment and other events that may occur over the life of the investment may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which it is recorded.

Refer to Note 3—Investments for additional information regarding fair value measurements and our application of ASC 820.

Revenue Recognition

Interest Income Recognition

Interest income, including the amortization of premiums, acquisition costs and amendment fees, the accretion of original issue discounts (“OID”), andpaid-in-kind (“PIK”) interest, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when a loan becomes 90 days or more past due or if our qualitative assessment indicates that the debtor is unable to service its debt or other obligations, we will place the loan onnon-accrual status and cease recognizing interest income on that loan for financial reporting purposes until the borrower has demonstrated the ability and intent to pay contractual amounts due. However, we remain contractually entitled to this interest. Interest payments received onnon-accrual loans may be recognized as income or applied to the cost basis depending upon management’s judgment. Generally,non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current, or due to a restructuring such that the interest income is deemed to be collectible. AtAs of December 31, ~~2017, certain~~2020, loans to ~~two portfolio companies, Sunshine Media Holdings and Alloy Die Casting Corp.,~~B+T Group Acquisition Inc. (“B+T”) were onnon-accrual status with an aggregate debt cost basis of ~~approximately $27.9~~$7.2 million, or ~~6.8%~~1.6% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of approximately ~~$5.4~~$6.6 million, or ~~1.5%~~1.6% of the fair value of all debt investments in our portfolio. AtAs of September 30, ~~2017, certain~~2020, loans to ~~two portfolio companies, Sunshine Media Holdings and Alloy Die Casting Corp.,~~B+T were onnon-accrual status with an aggregate debt cost basis of ~~approximately $27.9~~$7.2 million, or ~~7.5%~~1.6% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of approximately ~~$5.6~~$6.5 million, or ~~1.7%~~1.6% of the fair value of all debt investments in our portfolio.

We currently hold, and we expect to hold in the future, some loans in our portfolio that contain OID or PIK provisions. We recognize OID for loans originally issued at discounts and recognize the income over the life of the obligation based on an effective yield calculation. PIK interest, computed at the contractual rate specified in a loan agreement, is added to the principal balance of a loan and recorded as income over the life of the obligation. Thus, the actual collection of PIK income may be deferred until the time of debt principal repayment. To maintain our ability to be taxed as a RIC, we may need to pay out both ~~of our~~ OID and PIKnon-cash income amounts in the form of distributions, even though we have not yet collected the cash on either.

As of each of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, we ~~had six~~held five OID loans, primarily from the syndicated loans in our portfolio. We recorded OID income of ~~$0.1~~$21 thousand and $0.2 million ~~and $20 for~~during the three months ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively. The unamortized balance of OID investments as of each of December 31, ~~2017~~2020 and September 30, ~~2017~~2020 totaled ~~$0.4~~$0.6 million. As of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, we had ~~seven~~six and ~~six~~seven investments which had a PIK interest component, respectively. We recorded PIK interest income of ~~$1.2~~$0.5 million ~~for each of~~and $0.3 million during the three months ended December 31, ~~2017,~~2020 and ~~2016.~~2019, respectively. We collected $2.2 million and $0 ~~and $1.0 million of~~in PIK interest in cash ~~for~~during the three months ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively.

Success Fee Income Recognition

We record success fees as income when earned, which often occurs upon receipt of cash. Success fees are generally contractually due upon a change of control in a portfolio company, typically resulting from an exit or ~~sale.~~sale, and are non-recurring.

Dividend Income Recognition

We accrue dividend income on preferred and common equity securities to the extent that such amounts are expected to be collected and if we have the option to collect such amounts in cash or other consideration. During the year ended September 30, 2017, we recharacterized $0.2 million of dividend income from our investment in Behrens Manufacturing, LLC recorded during our fiscal year ended September 30, 2016 as a return of capital.

~~Deferred Financing and Offering Costs~~

Deferred financing and offering costs consist of costs incurred to obtain financing, including lender fees and legal fees. Costs associated with our revolving line of credit are deferred and amortized using the straight-line method, which approximates the effective interest method, over the term of the revolving line of credit. Costs associated with the issuance of our mandatorily redeemable preferred stock are presented as discounts to the liquidation value of the mandatorily redeemable preferred stock and are amortized using the straight-line method, which approximates the effective interest method, over the terms of the respective financings. See Note 5 —~~Borrowings~~~~andNote 6 —~~~~Mandatorily Redeemable Preferred Stock~~ ~~for further discussion.~~

Related Party Fees

We are party to the Advisory Agreement with the Adviser, which is owned and controlled by our chairman and chief executive officer. In accordance with the Advisory Agreement, we pay the Adviser fees as compensation for its services, consisting of a base management fee and an incentive fee. Additionally, we pay the Adviser a loan servicing fee as compensation for its services as servicer under the terms of our Fifth Amended and Restated Credit Agreement with KeyBank National Association (“KeyBank”), as administrative agent, lead arranger and a lender ~~(our~~(as amended, our “Credit Facility”). These fees are accrued at the end of the quarter when the services are performed and generally paid the following quarter.

We are also party to the Administration Agreement with the Administrator, which is owned and controlled by our chairman and chief executive officer, whereby we pay separately for administrative ~~services pursuant to the Administration Agreement. These administrative fees are accrued at the~~

~~end of the quarter when the services are performed and generally paid the following quarter.~~services. Refer to Note 4—Related Party Transactions for additional information regarding these related party fees and agreements.

Recent Accounting Pronouncements

In ~~November 2016,~~August 2018, the FASB issued Accounting Standards Update~~2016-18,~~2018-13, ~~“Restricted Cash (a consensus of~~“Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the ~~Emerging Issues Task Force)~~Disclosure Requirements for Fair Value” (“ASU~~2016-18”~~2018-13”), which ~~requires that~~modifies the ~~statement of cash flows explain the change during the period~~disclosure requirements in ~~the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. We are currently assessing the impact of~~ASC 820. ASU~~2016-18~~ ~~and do not anticipate a material impact on our financial position, results of operations or cash flows.ASU 2016-18~~2018-13 is effective for annual reporting periods beginning after December 15, ~~2017, including interim periods within those fiscal years, with early~~2019, and we adopted ASU 2018-13 effective October 1, 2020. Our adoption ~~permitted.~~

~~In August 2016, the FASB issued Accounting Standards Update2016-15,~~ ~~“Classification~~ of ~~Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)”~~(“ASU ~~2016-15”),~~ ~~which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. We are currently assessing the impact ofASU 2016-15~~ ~~and do not anticipate a material impact on our cash flows. ASU2016-15~~ ~~is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted.~~

~~In March 2016, the FASB issued Accounting Standards Update2016-06,~~ “~~Contingent Put and Call Options in Debt Instruments~~”~~(“ASU 2016-06”),~~ ~~which clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related. The adoption ofASU 2016-06~~2018-13 did not have a material impact on our financial position, results of operations or cash flows. ~~ASU2016-06~~ ~~is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those fiscal years, and we adopted ASU2016-06~~ ~~effective October 1, 2017.~~

~~In January 2016, the FASB issued Accounting Standards Update2016-01,~~~~“Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”~~~~(“ASU 2016-01”),~~ which changes how entities measure certain equity investments and how entities present changes in the fair value of financial liabilities measured under the fair value option that are attributable to instrument-specific credit risk. We are currently assessing the impact of~~ASU 2016-01~~ ~~and do not anticipate a material impact on our financial position, results of operations or cash flows. ASU2016-01~~ ~~is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted for certain aspects ofASU 2016-01~~ ~~relating to the recognition of changes in fair value of financial liabilities when the fair value option is elected.~~

~~In February 2015, the FASB issued Accounting Standards Update2015-02,~~ “~~Amendments to the Consolidation Analysis~~”~~(“ASU 2015-02”),~~ ~~which amends or supersedes the scope and consolidation guidance under existing GAAP. The adoption ofASU 2015-02~~ ~~did not have a material impact on our financial position, results of operations or cash flows.ASU 2015-02~~ ~~is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those years, and we adoptedASU 2015-02~~ ~~effective April 1, 2016. In October 2016, the FASB issued Accounting Standards Update2016-17,~~ “~~Interests Held through Related Parties That Are under Common Control~~~~” (“ASU2016-17”),~~ ~~which amends the consolidation guidance inASU 2015-02~~ ~~regarding the treatment of indirect interests held through related parties that are under common control. The adoption ofASU 2016-17~~ ~~did not have a material impact on our financial position, results of operations or cash flows. ASU2016-17~~ ~~is effective for annual reporting periods beginning after December 15, 2016 and interim periods within those years, and we adopted ASU2015-02~~ ~~effective October 1, 2017.~~

~~In May 2014, the FASB issued Accounting Standards Update2014-09,~~ “~~Revenue from Contracts with Customers~~”~~(“ASU 2014-09”),~~ ~~which was amended in March 2016 by FASB Accounting Standards Update2016-08,~~~~“Principal versus Agent Considerations”~~~~(“ASU 2016-08”),~~ ~~in April 2016 by FASB Accounting Standards Update2016-10,~~~~“Identifying Performance Obligations and Licensing”~~~~(“ASU2016-10”),~~ ~~in May 2016 by FASB Accounting Standards Update2016-12,~~~~“Narrow-Scope Improvements and Practical Expedients”~~~~(“ASU 2016-12”),~~ ~~and in December 2016 by FASB Accounting Standards Update2016-20,~~~~“Technical Corrections and Improvements to Topic 606”~~~~(“ASU2016-20”).~~ ~~ASU2014-09,~~ as amended, supersedes or replaces nearly all GAAP revenue recognition guidance. The new guidance establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time and will expand disclosures about revenue. In July 2015, the FASB issued Accounting Standards Update~~2015-14,~~ “~~Deferral of the Effective Date,~~~~” which deferred the effective date ofASU 2014-09.ASU 2014-09,~~ ~~as amended byASU 2015-14,ASU 2016-08,ASU 2016-10,ASU 2016-12,~~ ~~andASU 2016-20,~~ is now effective for annual reporting periods beginning after December 15, 2017 and interim periods within those years, with early adoption permitted for annual reporting periods beginning after December 15, 2016 and interim periods within those years. We continue to assess the impact of~~ASU 2014-09,~~ as amended, and expect to identify similar performance obligations as compared to existing guidance. As a result, we do not anticipate a material change in the timing of revenue recognition or a material impact on our financial position, results of operations, or cash flows from adopting this standard.

NOTE 3. 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 each of December 31, ~~2017,~~2020 and September 30, 2020, 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, and our ~~investments~~investment in ~~FedCap and~~ Leeds Novamark Capital I, L.P. (“Leeds”), which ~~were~~was valued using net asset value as a practical expedient. As of September 30, 2017, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investments in FedCap and Leeds, which were valued using net asset valueNAV 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, 2017, we transferred our investment in Funko from Level 3 to Level 2 as a result of the initial public offering of Funko, Inc. in November 2017 due to convertibility of our investment into shares of Funko, Inc. During the three months ended December 31, 2016,2020 and 2019, there were no investments transferred into or out of Levels 1, 2 or 3 of the valuation hierarchy.

As of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:


				Fair Value Measurements										Fair Value Measurements
	Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
As of December 31, 2017:
As of December 31, 2020:
Secured first lien debt	$	196,195		$	—	$	—		$	196,195	$	219,921		$	—	$	—		$	219,921
Secured second lien debt		171,690			—		—			171,690		194,219			—		—			194,219
Unsecured debt		3,444			—		—			3,444		15			—		—			15
Preferred equity		5,661			—		—			5,661		9,236			—		—			9,236
Common equity/equivalents		12,591	^(B)		—		157	^(A)		12,434		24,559	^(A)		—		86	^(B)		24,473

Total Investments at December 31, 2017	$	389,581		$	—	$	157		$	389,424
Total Investments at December 31, 2020											$	447,950		$	—	$	86		$	447,864


				Fair Value Measurements
	Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
As of September 30, 2017:
Secured first lien debt	$	173,896		$	—	$	—		$	173,896
Secured second lien debt		155,249			—		—			155,249
Unsecured debt		3,324			—		—			3,324
Preferred equity		6,561			—		—			6,561
Common equity/equivalents		13,343	^(B)		—		—			13,343

Total Investments at September 30, 2017	$	352,373		$	—	$	—		$	352,373


				Fair Value Measurements
	Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
As of September 30, 2020:
Secured first lien debt	$	213,468		$	—	$	—		$	213,468
Secured second lien debt		196,986			—		—			196,986
Unsecured debt		4,299			—		—			4,299
Preferred equity		7,000			—		—			7,000
Common equity/equivalents		23,929	^(A)		—		48	^(B)		23,881

Total Investments as of September 30, 2020	$	445,682		$	—	$	48		$	445,634

^(A)	Excludes our investment in Leeds with a fair value of $4.4 million and $4.7 million as of December 31, 2020 and September 30, 2020, respectively. Leeds was valued using NAV as a practical expedient.

^(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 a~~180-daylock-up~~ ~~period, which expires in May 2018, and other~~certain restrictions.

^(B)

Excludes our investments in FedCap and Leeds with fair values of $0.8 million and $2.1 million, respectively, as of December 31, 2017 and fair values of $0.8 million and $1.6 million, respectively, as of September 30, 2017. FedCap and Leeds were valued using net asset value as a practical expedient.

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, ~~2017~~2020 and September 30, ~~2017,~~2020, by caption on our accompanyingConsolidated 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)						Total Recurring Fair Value Measurements Reported in *Consolidated Statements of Assets and Liabilities* Using Significant Unobservable Inputs (Level 3)
	December 31, 2017			September 30, 2017			December 31, 2020			September 30, 2020
Non-Control/Non-Affiliate Investments
Secured first lien debt	$	168,876		$	147,447		$	198,385		$	199,860
Secured second lien debt		146,844			129,890			165,955			168,621
Unsecured debt		3,356			3,324			15			4,299
Preferred equity		4,439			5,735			4,997			4,677
Common equity/equivalents		3,776	^(A)		2,068	^(B)		18,747	^(A)		18,824	^(B)

Total Non-Control/Non-Affiliate Investments	$	327,291		$	288,464		$	388,099		$	396,281

Affiliate Investments
Secured first lien debt	$	20,009		$	18,821		$	16,636		$	8,658
Secured second lien debt		16,781			17,294			20,199			20,300
Unsecured debt		88			—
Preferred equity		1,222			826			4,038			2,069
Common equity/equivalents		5,756			5,707			2,211			2,152

Total Affiliate Investments	$	43,856		$	42,648		$	43,084		$	33,179

Control Investments
Secured first lien debt	$	7,310		$	7,628		$	4,900		$	4,950
Secured second lien debt		8,065			8,065			8,065			8,065
Preferred equity								201			254
Common equity/equivalents		2,902			3,172			3,515			2,905

Total Control Investments	$	18,277		$	18,865		$	16,681		$	16,174

Total Investments at Fair Value Using Level 3 Inputs	$	389,424		$	349,977		$	447,864		$	445,634

^(A)

Excludes our investments in ~~FedCap,~~ Leeds and Funko with fair values of ~~$0.8 million, $2.1~~$4.4 million and ~~$0.2~~$0.1 million, respectively, as of December 31, ~~2017. FedCap and~~2020. Leeds ~~were~~was valued using ~~net asset value~~NAV as a practical expedient, and Funko was valued using Level 2 inputs.

^(B)

Excludes our investments in ~~FedCap~~Leeds and ~~Leeds~~Funko with fair values of ~~$0.8~~$4.7 million and ~~$1.6 million,~~$48 thousand, respectively, as of September 30, ~~2017, which were~~2020. Leeds was valued using ~~net asset value~~NAV as a practical ~~expedient.~~expedient, and Funko was valued using Level 2 inputs.

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, ~~2017~~2020 and September 30, ~~2017.~~2020. The table below is not intended to beall-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,
2017

September 30,
2017

Valuation
Techniques/
Methodologies

Unobservable
Input

December 31,
2017

September 30,
2017

December 31,
2020

September 30,
2020

Valuation
Techniques/
Methodologies

Unobservable
Input

December 31,
2020

September 30,
2020

Secured first lien debt^(A)

186,850

136,272

Yield Analysis

Discount Rate

7.6% - 22.9% /11.6%

8.0% - 25.0% / 12.5%

202,610

195,486

Yield Analysis

Discount Rate

8.8% - 25.4% / 13.3%

8.3% - 24.6% / 13.4%

9,345

37,624

TEV

EBITDA multiple

3.1x – 3.1x /3.1x

3.2x – 10.1x / 8.2x

17,311

17,622

TEV

EBITDA multiple

5.2x – 5.2x / 5.2x

4.8x – 4.8x / 4.8x

EBITDA

$1,408 - $1,408 / $1,408

$1,378 - $9,420 / $6,676

EBITDA

6,301 - $6,301 / $6,301

6,492 - $6,492 / $6,492

Revenue multiple

0.3x – 0.4x / 0.3x

Revenue multiple

0.3x – 0.3x / 0.3x

Revenue

$6,219 - $11,035 /$10,719

$6,934 - $12,094 / $11,733

Revenue

9,122 - $12,000 / $11,791

7,451 - $11,500 / $11,165

Secured second lien
debt^(B)

137,168

122,165

Yield Analysis

Discount Rate

10.7% - 23.9% /14.4%

10.8% - 23.3% /14.0%

Secured second lien debt

160,494

163,141

Yield Analysis

Discount Rate

10.4% - 28.3% / 15.1%

10.5% - 25.1% / 14.5%

25,660

24,681

Market Quote

IBP

83.0% - 99.3% / 92.7%

77.7% - 98.8% / 89.2%

25,266

22,607

Market Quote

IBP

80.0% - 101.0% / 96.1%

84.5% - 101.5% /97.2%

8,065

9,164

TEV

EBITDA multiple

5.3x – 5.3x / 5.3x

5.3x – 9.0x / 5.7x

9,256

10,477

TEV

EBITDA multiple

4.6x – 6.4x /5.2x

4.8x – 6.6x /5.4x

EBITDA

2,975 - $2,975 / $2,975

3,020 - $69,552 / $10,999

EBITDA

$3,004 - $70,276 / $25,308

$3,000 - $73,650 / $26,424

Unsecured debt

3,444

3,324

Yield Analysis

Discount Rate

10.0% - 13.9% /10.1%

10.0% - 10.0% /10.0%

—

4,282

Yield Analysis

Discount Rate

—

12.6% - 12.6% / 12.6%

TEV

Revenue multiple

0.3x – 1.4x / 1.0x

Preferred and common equity /
equivalents^(C)(D)

17,964

17,370

TEV

EBITDA multiple

3.1x – 9.7x / 6.0x

3.2x – 10.1x / 6.1x

EBITDA

$301 -$30,531 /$12,270

$890 -$84,828/ $12,835

Revenue

947 - $12,000 / $4,531

883 - $11,500 / $4,325

Preferred and common equity / equivalents^(A)

33,709

30,881

TEV

EBITDA multiple

3.2x – 9.3x / 5.8x

3.0x – 9.2x / 6.0x

Revenue multiple

0.3x – 1.7x / 0.5x

0.3x – 6.5 x /0.7x

EBITDA

483 - $88,306 / $9,819

483 - $88,142 / $16,403

Revenue

$6,219 -$513,299 /$130,351

$2,317 -$503,620/ $128,819

Revenue multiple

0.3x – 1.4x / 0.8x

131

138

Market Quotes

IBP

26.2% - 26.2% /26.2%

27.9% - 27.9% /27.9%

Revenue

947 - $141,040 / $44,403

883 - $161,232 / $48,273

Total Level 3 Investments, at Fair Value

389,424

349,977

447,864

445,634

^(A)

Fair value as of December 31, 2017 includes three new proprietary debt investments totaling $37.2 million, which were valued at cost, using the transaction price as the unobservable input. Fair value as of September 30, 2017 includes one new proprietary debt investment totaling $12.0 million, which was valued at cost, using the transaction price as the unobservable input, and one proprietary debt investment totaling $7.8 million, which was valued at the expected payoff amount as the unobservable input.

^(B)

Fair value as of December 31, 2017 includes one new proprietary debt investment totaling $7.5 million, which was valued at cost, using the transaction price as the unobservable input. Fair value as of September 30, 2017 includes one proprietary debt investment totaling $3.5 million which was valued at the expected payoff as the unobservable input.

^(C)

Fair value as of December 31, 2017 includes one new proprietary investment totaling $1.5 million, which was valued at cost, using transaction price as the unobservable input. Fair value as of September 30, 2017 includes two new proprietary investments totaling $1.0 million, which were valued at cost, using transaction price as the unobservable input, and one proprietary investment totaling $1.4 million, which was valued at the expected payoff amount as the unobservable input.

^(D)

~~Fair value as of December 31, 2017~~2020 excludes our investments in ~~FedCap,~~ Leeds and Funko with fair values of ~~$0.8 million, $2.1~~$4.4 million and ~~$0.2~~$0.1 million, ~~respectively,~~respectively. Fair value as of ~~December 31, 2017. FedCap~~September 30, 2020 excludes our investments in Leeds and Funko with fair values of $4.7 million and $48 thousand, respectively. Leeds ~~were~~was valued using ~~net asset value~~NAV as a practical expedient and Funko was valued using Level 2 inputs as of both December 31, ~~2017. Fair value as of~~2020 and September 30, 2017 excludes our investments in FedCap and Leeds with fair values of $0.8 million and $1.6 million, respectively, as of September 30, 2017, which were valued using net asset value as a practical expedient.2020.

Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in ~~market yields, discounts~~discount rates, ~~leverage,~~ 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 or decrease~~increase/(decrease) in market yields, discount rates, or ~~leverage or~~ a ~~decrease~~(decrease)/increase in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a ~~corresponding decrease or~~ (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, ~~2017~~2020 and ~~2016~~2019 for all investments for which ~~the Adviser determines~~we determine fair value using unobservable (Level 3) ~~factors.~~inputs.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)


Three months ended December 31, 2017	Secured First Lien Debt			Secured Second Lien Debt			Unsecured Debt			Preferred Equity			Common Equity/ Equivalents			Total
Fair Value as of September 30, 2017	$	173,896		$	155,249		$	3,324		$	6,561		$	10,947		$	349,977
																				Secured			Secured								Common
Three months ended December 31, 2020																				First Lien Debt			Second Lien Debt			Unsecured Debt			Preferred Equity		Equity/ Equivalents			Total
Fair Value as of September 30, 2020																				$	213,468		$	196,986		$	4,299		$	7,000	$	23,881		$	445,634
Total gains (losses):																			Total gains (losses):
Net realized gain (loss)^(A)		—			—			—			602			(28	)		574
Net realized loss^(A)																					—			—			—			—		(2,393	)		(2,393	)
Net unrealized appreciation (depreciation)^(B)		1,115			445			(3	)		558			(12	)		2,103				932			1,009			(2	)		138		3,297			5,374
Reversal of prior period net (appreciation) depreciation on realization^(B)		—			(87	)		—			(725	)		—			(812	)
Reversal of prior period net depreciation on realization^(B)																					—			—			133			—		2,950			3,083
New investments, repayments and settlements:^(C)																			New investments, repayments and settlements:^(C)
Issuances/originations		37,426			18,365			123			125			1,500			57,539				27,204			337			113			2,098		—			29,752
Settlements/repayments		(12,677	)		(5,847	)		—			—			—			(18,524	)			(1,683	)		(24,113	)		(4,528	)		—		—			(30,324	)
Net proceeds from sales		—			—			—			(1,301	)		27			(1,274	)
Sales																					—			—			—			—		(3,262	)		(3,262	)
Transfers		(3,565	)		3,565			—			(159	)		—			(159	)			(20,000	)		20,000			—			—		—			—

Fair Value as of December 31, 2017	$	196,195		$	171,690		$	3,444		$	5,661		$	12,434		$	389,424
Fair Value as of December 31, 2020																				$	219,921		$	194,219		$	15		$	9,236	$	24,473		$	447,864


Three months ended December 31, 2016	Secured First Lien Debt			Secured Second Lien Debt			Unsecured Debt			Preferred Equity			Common Equity/ Equivalents			Total
Fair Value as of September 30, 2016	$	198,721		$	100,320		$	3,012		$	10,262		$	7,755		$	320,070
Total gains (losses):
Net realized (loss) gain^(A)		(4,899	)		25			—			1,426			—			(3,448	)
Net unrealized appreciation (depreciation)^(B)		2,656			(3,220	)		1			1,116			(3,246	)		(2,693	)
Reversal of prior period net depreciation (appreciation) on realization^(B)		2,210			66			—			(1,059	)		370			1,587
New investments, repayments and settlements:^(C)
Issuances/originations		548			19,358			75			394			344			20,719
Settlements/repayments		(38,865	)		(3,426	)		3			—			—			(42,288	)
Net proceeds from sales		(101	)		(25	)		—			(7,724	)		(370	)		(8,220	)
Transfers		(3,940	)		923			—			—			3,017			—

Fair Value as of December 31, 2016	$	156,330		$	114,021		$	3,091		$	4,415		$	7,870		$	285,727

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)


	Secured			Secured								Common
Three months ended December 31, 2019	First Lien Debt			Second Lien Debt			Unsecured Debt		Preferred Equity			Equity/ Equivalents			Total
Fair Value as of September 30, 2019	$	178,213		$	181,541		$	3,933	$	9,854		$	25,104		$	398,645
Total gains (losses):
Net realized loss^(A)		—			(4,409	)		—		—			—			(4,409	)
Net unrealized appreciation (depreciation)^(B)		(537	)		(132	)		14		(680	)		(2,921	)		(4,256	)
Reversal of prior period net depreciation on realization^(B)		—			4,307			—		—			—			4,307
New investments, repayments and settlements:^(C)
Issuances/originations		39,403			3,058			102		300			—			42,863
Settlements/repayments		(1,739	)		(10,721	)		—		—			—			(12,460	)

Fair Value as of December 31, 2019	$	215,340		$	173,644		$	4,049	$	9,474		$	22,183		$	424,690

^(A)	Included in net realized gain (loss) on investments on our accompanyingConsolidated Statements of Operations for the ~~three months ended December 31, 2017 and 2016.~~corresponding period.

^(B)	Included in net unrealized appreciation (depreciation) on investments on our accompanying Consolidated Statements of ~~Operations~~Operations for the ~~three months ended December 31, 2017 and 2016.~~corresponding period.

^(C)

Includes increases in the cost basis of investments resulting from new portfolio investments, accretion of discounts, PIK, and othernon-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 December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, we held 38 and 3537 proprietary investments with an aggregate fair value of ~~$356.4~~$420.1 million and ~~$318.6~~$411.5 million, or ~~90.8%~~92.9% and ~~90.4%~~91.4% of the total ~~aggregate~~investment portfolio at fair value, respectively. The following significant proprietary investment transactions occurred during the three months ended December 31, ~~2017:~~2020:

In October 2017, we sold our investment in Flight Fit N Fun LLC for a realized gain of $0.6 million. In connection with the sale, we received net cash proceeds of approximately $9.4 million, including the repayment of our debt investment of $7.8 million at par.

~~In October 2017,~~December 2020, we invested ~~$11.0~~$19.0 million in ~~Applied Voice & Speech Technologies, Inc.~~Effective School Solutions LLC through secured first lien debt.

In ~~November 2017,~~December 2020, we invested ~~$7.5~~$10.0 million in ~~Arc Drilling~~Encore Dredging Holdings, LLC through a combination of secured first lien debt and equity.

~~In November 2017, we invested $7.5 million in Gray Matter Systems, LLC through secured second lien debt.~~

In December ~~2017,~~2020, our investment in Aerospace Engineering, LLC paid off at par for net proceeds of $20.2 million. In conjunction with the payoff, we ~~invested $20.0 million in Impact! Chemical Technologies, Inc. through secured first lien debt.~~received a prepayment fee of $0.2 million.

Syndicated Investments

As of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, we held 13nine and 1211 syndicated investments with an aggregate fair value of ~~$36.0~~$32.3 million and ~~$33.8~~$38.9 million, or ~~9.2%~~7.1% and ~~9.6%~~8.6% of the total investment portfolio at fair value, respectively. The following significant syndicated investment transactions occurred during the three months ended December 31, ~~2017:~~2020:

In ~~October 2017, PSC Industrial~~December 2020, our investment in Edmentum Ultimate Holdings, LLC ~~paid off at par for~~was sold, which resulted in a realized loss of approximately $2.4 million on our equity investment. In connection with the sale, we received net cash proceeds of ~~$3.5 million.~~approximately $4.9 million, including the repayment of our debt investment of $4.6 million at par.

In ~~November 2017, DataPipe, Inc. paid off at par for~~December 2020, our investment in Vertellus Holdings LLC was sold, which resulted in a realized loss of approximately $41 thousand. In connection with the sale, we received net cash proceeds of ~~$2.0 million.~~

~~In November 2017, we invested $5.0~~approximately $4.1 million, ~~in DigiCert Holdings, Inc. through secured second lien debt.~~

~~In November 2017, we invested $4.0~~including the repayment of our debt investment of $1.1 million ~~in Red Ventures, LLC through secured second lien debt.~~

at par.

~~In November 2017, we invested $1.0 million in ABG Intermediate Holdings 2, LLC through secured second lien debt.~~

Investment Concentrations

As of December 31, ~~2017,~~2020, our investment portfolio consisted of investments in 5147 portfolio companies located in 24 states in 18 different industries, with an aggregate fair value of ~~$392.4~~$452.4 million. The five largest investments at fair value as of December 31, 2020 totaled ~~$111.0~~$130.2 million, or ~~28.3%~~28.8% of our total investment portfolio, as compared to the five largest investments at fair value as of September 30, ~~2017~~2020 totaling ~~$110.9~~$130.3 million, or ~~31.5%~~28.9% of our total investment portfolio. As of December 31, ~~2017~~2020 and September 30, ~~2017~~2020, our average investment by obligor was ~~$8.8~~$10.4 million and $10.3 million at ~~cost.~~cost, respectively.

The following table outlines our investments by security type atas of December 31, ~~2017~~2020 and September 30, ~~2017:~~2020:


	December 31, 2017								September 30, 2017								December 31, 2020								September 30, 2020
	Cost				Fair Value				Cost				Fair Value				Cost				Fair Value				Cost				Fair Value
Secured first lien debt	$	217,993	48.4	%	$	196,195	50.0	%	$	198,942	48.4	%	$	173,896	49.4	%	$	246,529	50.5	%	$	219,921	48.6	%	$	241,008	48.7	%	$	213,468	47.4	%
Secured second lien debt		186,465	41.4			171,690	43.7			168,247	40.9			155,249	44.1			202,065	41.4			194,219	42.9			205,841	41.6			196,986	43.7
Unsecured debt		3,447	0.8			3,444	0.9			3,324	0.8			3,324	0.9			293	0.1			15	0.0			4,708	1.0			4,299	1.0

Total debt investments		407,905	90.6			371,329	94.6			370,513	90.1			332,469	94.4			448,887	92.0			414,155	91.5			451,557	91.3			414,753	92.1

Preferred equity		18,052	4.0			5,661	1.5			18,794	4.5			6,561	1.9			21,030	4.3			9,236	2.1			18,932	3.8			7,000	1.5
Common equity/equivalents		24,175	5.4			15,440	3.9			22,128	5.4			13,343	3.7			18,194	3.7			28,968	6.4			24,158	4.9			28,647	6.4

Total equity investments		42,227	9.4			21,101	5.4			40,922	9.9			19,904	5.6			39,224	8.0			38,204	8.5			43,090	8.7			35,647	7.9

Total Investments	$	450,132	100.0	%	$	392,430	100.0	%	$	411,435	100.0	%	$	352,373	100.0	%	$	488,111	100.0	%	$	452,359	100.0	%	$	494,647	100.0	%	$	450,400	100.0	%

Our investments at fair value consisted of the following industry classifications atas of December 31, ~~2017~~2020 and September 30, ~~2017:~~2020:


	December 31, 2017					September 30, 2017					December 31, 2020					September 30, 2020
Industry Classification	Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments
Diversified/Conglomerate Service	$	91,193		23.2	%	$	80,723		22.9	%	$	100,828		22.3	%	$	92,960		20.6	%
Oil and gas		56,192		14.3			34,712		9.9
Healthcare, education and childcare		43,499		11.1			46,288		13.1
Healthcare, Education, and Childcare												78,818		17.4			64,155		14.3
Diversified/Conglomerate Manufacturing		42,870		10.9			40,843		11.6			44,596		9.9			43,995		9.8
Cargo Transportation												36,021		8.0			34,542		7.7
Beverage, Food, and Tobacco												30,078		6.6			29,171		6.5
Telecommunications		42,781		10.9			31,350		8.9			27,992		6.2			27,994		6.2
Oil and Gas												24,072		5.3			24,725		5.5
Diversified Natural Resources, Precious Metals, and Minerals												23,999		5.3			24,014		5.3
Automobile		19,590		5.0			20,082		5.7			18,273		4.0			18,149		4.0
Diversified natural resources, precious metals and minerals		18,744		4.8			18,949		5.4
Beverage, food and tobacco		13,934		3.6			14,103		4.0
Cargo Transportation		13,098		3.3			13,081		3.7
Aerospace and Defense												17,043		3.8			37,460		8.3
Machinery		12,502		3.2			5,114		1.4			10,772		2.4			10,264		2.3
Home and Office Furnishings, Housewares and Durable Consumer Products		10,150		2.6			10,100		2.9
Personal andnon-durable consumer products		7,080		1.8			7,035		2.0
Chemicals, Plastics, and Rubber												9,962		2.2			13,715		3.0
Home and Office Furnishings, Housewares, and Durable Consumer Products												9,750		2.2			9,675		2.2
Hotels, Motels, Inns, and Gaming		6,938		1.8			7,136		2.0			8,113		1.8			8,052		1.8
Textiles and leather		5,640		1.4			4,879		1.4
Printing and publishing		3,310		0.8			3,628		1.0
Leisure, Amusement, Motion Pictures, Entertainment		—		—			9,225		2.6
Textiles and Leather												6,312		1.4			5,905		1.3
Buildings and Real Estate												3,240		0.7			3,110		0.7
Other, < 2.0%		4,909		1.3			5,125		1.5			2,490		0.5			2,514		0.5

Total Investments	$	392,430		100.0	%	$	352,373		100.0	%	$	452,359		100.0	%	$	450,400		100.0	%

Our investments at fair value were included in the following U.S. geographic regions atas of December 31, ~~2017~~2020 and September 30, ~~2017:~~2020:


	December 31, 2017					September 30, 2017					December 31, 2020					September 30, 2020
Geographic Region	Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments
Location											Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments
South	$	163,988		41.8	%	$	150,727		42.8	%	$	225,199		49.8	%	$	214,808		47.7	%
West		128,806		32.8			116,302		33.0			119,672		26.4			138,746		30.8
Northeast												57,336		12.7			40,740		9.0
Midwest		66,481		17.0			58,915		16.7			50,152		11.1			56,106		12.5
Northeast		33,155		8.4			26,429		7.5

Total Investments	$	392,430		100.0	%	$	352,373		100.0	%	$	452,359		100.0	%	$	450,400		100.0	%

The geographic ~~region~~composition indicates the location of the headquarters for our portfolio companies. A portfolio company may have ~~a number of other business~~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, ~~2017:~~2020:


		Amount^(A)				Amount
For the remaining nine months ending September 30:	2018	$	33,643		2021	$	48,332
For the fiscal years ending March 31:	2019		53,920
For the fiscal years ending September 30:					2022		88,085
	2020		82,103		2023		48,440
	2021		81,813		2024		44,834
	2022		45,022		2025		132,500
	Thereafter		117,154		Thereafter		87,407

	Total contractual repayments	$	413,655		Total contractual repayments	$	449,598
	Adjustments to cost basis of debt investments		(5,750	)	Adjustments to cost basis of debt investments		(711	)
	Investments in equity securities		42,227		Investments in equity securities		39,224

	Investments held as of December 31, 2017 at Cost:	$	450,132		Investments held as of December 31, 2020 at cost:	$	488,111

Receivables from Portfolio Companies

Receivables from portfolio companies representnon-recurring costs incurred on behalf of such portfolio companies and are included in other assets on our accompanyingConsolidated Statements of Assets and ~~Liabilities~~.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~~ write off accounts receivable when we have exhausted collection efforts and have deemed the receivables uncollectible. As of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, we had gross receivables from portfolio companies of ~~$0.4~~$0.1 million and ~~$0.5~~$0.4 million, respectively. The allowance

for uncollectible receivables was ~~$32~~$0 and ~~$44 at~~$11 thousand as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, respectively.

NOTE 4. RELATED PARTY TRANSACTIONS

Transactions with the Adviser

We have been externally managed by the Adviser pursuant to the Advisory Agreement since October 1, 2004 pursuant to which we pay the Adviser a base management fee and an incentive fee for its services. The Advisory Agreement originally included administrative services; however, it was amended and restated on October 1, 2006. Simultaneously, we entered into the Administration Agreement with the Administrator (discussed further below) to provide those services. With the unanimous approval of our Board of Directors, the Advisory Agreement was later amended in October 2015 to reduce the base management fee payable under the agreement from 2.0% per annum to 1.75% per annum, effective July 1, 2015, with all other terms remaining unchanged. On July ~~11, 2017,~~14, 2020, our Board of Directors, including a majority of the directors who are not parties to the Advisory Agreement or interested persons of such party, unanimously approved the ~~annual~~ renewal of the Advisory Agreement through August 31, ~~2018.~~2021.

We also pay the Adviser a loan servicing fee for its role of servicer pursuant to our Credit Facility. The entire loan servicing fee paid to the Adviser by Business Loan isnon-contractually, unconditionally and irrevocably credited against the base management fee otherwise payable to the Adviser, since Business Loan is a consolidated subsidiary of ours, and overall, the base management fee (including any loan servicing fee) cannot exceed 1.75% of total assets ~~(as reduced by~~(including investments made with proceeds of borrowings, less any uninvested cash ~~and~~or cash equivalents ~~pledged to creditors)~~resulting from borrowings) during any given fiscal year pursuant to the Advisory Agreement.

Two of our executive officers, David Gladstone (our chairman and chief executive officer) and Terry Lee Brubaker (our vice chairman and chief operating officer), serve as directors and executive officers of the Adviser, which is 100% indirectly owned and controlled by Mr. Gladstone. Robert Marcotte (our president) also serves as an executive ~~managing director~~vice president of private equity (debt) of the Adviser. Michael LiCalsi, our general counsel and secretary (who also serves as the Administrator’s president, general counsel and secretary), is also the executive vice president of administration of our Adviser.

The following table summarizes the base management fee, incentive fee, and loan servicing fee and associatednon-contractual, unconditional and irrevocable credits reflected in our accompanyingConsolidated Statements of Operations:


	Three Months Ended December 31,						Three Months Ended December 31,
	2017			2016			2020			2019
Average total assets subject to base management fee^(A)	$	383,086		$	315,000		$	457,600		$	423,314
Multiplied by prorated annual base management fee of 1.75%		0.4375	%		0.4375	%		0.4375	%		0.4375	%

Base management fee^(B)	$	1,676		$	1,378		$	2,002		$	1,852
Portfolio company fee credit		(664	)		(649	)		(352	)		(352	)
Senior syndicated loan fee credit		(92	)		(13	)
Syndicated loan fee credit								(87	)		(121	)

Net Base Management Fee	$	920		$	716		$	1,563		$	1,379

Loan servicing fee^(B)		1,186			983			1,348			1,403
Credit to base management fee - loan servicing fee^(B)		(1,186	)		(983	)		(1,348	)		(1,403	)

Net Loan Servicing Fee	$	—		$	—		$	—		$	—

Incentive fee^(B)		1,373			1,293			1,367			1,394
Incentive fee credit		(85	)		(37	)		(211	)		(840	)

Net Incentive Fee	$	1,288		$	1,256		$	1,156		$	554

Portfolio company fee credit		(664	)		(649	)		(352	)		(352	)
Senior syndicated loan fee credit		(92	)		(13	)
Syndicated loan fee credit								(87	)		(121	)
Incentive fee credit		(85	)		(37	)		(211	)		(840	)

Credits to Fees From Adviser - other^(B)	$	(841	)	$	(699	)	$	(650	)	$	(1,313	)

^(A)

Average total assets subject to the base management fee is defined in the Advisory Agreement as total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the ~~applicable~~two most recently completed quarters within the respective ~~periods~~years and adjusted appropriately for any share issuances or repurchases during the ~~periods.~~period.

^(B)	Reflected ~~on a gross basis,~~ as a line item on our accompanyingConsolidated Statements of Operations.

Base Management Fee

The base management fee is payable quarterly to the Adviser pursuant to our Advisory Agreement and is assessed at an annual rate of 1.75%, computed on the basis of the value of our average total assets at the end of the two most recently-completed quarters (inclusive of the current quarter), which are total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings and adjusted appropriately for any share issuances or repurchases during the period.

Additionally, pursuant to the requirements of the 1940 Act, the Adviser makes available significant managerial assistance to our portfolio companies. The Adviser may also provide other services to our portfolio companies under certain agreements and may

receive fees for services other than managerial assistance. Such services may ~~include, but are not limited to:~~include: (i) assistance obtaining, sourcing or structuring credit facilities,

long term loans or additional equity from unaffiliated third parties; (ii) negotiating important contractual financial relationships; (iii) consulting services regarding restructuring of the portfolio company and financial modeling as it relates to raising additional debt and equity capital from unaffiliated third parties; and (iv) taking a primary role in interviewing, vetting and negotiating employment contracts with candidates in connection with adding and retaining key portfolio company management team members. The Advisernon-contractually, unconditionally, and irrevocably credits 100% of ~~these~~any fees for such services against the base management fee that we would otherwise be required to pay to the Adviser; however, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees, totaling ~~$8 and $28~~$15 thousand for each of the three months ended December 31, ~~2017~~2020 and ~~2016, respectively,~~2019, was retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser primarily for the valuation of portfolio companies.

Our Board of Directors accepted anon-contractual, unconditional, and irrevocable credit from the Adviser to reduce the annual base management fee on syndicated loan participations to 0.5%, to the extent that proceeds resulting from borrowings were used to purchase such syndicated loan participations, for each of the three months ended December 31, ~~2017~~2020 and ~~2016.~~2019.

Loan Servicing Fee

The Adviser also services the loans held by Business Loan (the borrower under the Credit Facility), in return for which the Adviser receives a 1.5% annual fee payable monthly based on the aggregate outstanding balance of loans pledged under our Credit Facility. As discussed in the notes to the table above, we treat payment of the loan servicing fee pursuant to the Credit Facility as a pre-payment of the base management fee under the Advisory Agreement. Accordingly, these loan servicing fees are 100% non-contractually, unconditionally and irrevocably credited back to us by the Adviser.

Incentive Fee

The incentive fee consists of two parts: an income-based incentive fee and a capital ~~gains~~gains-based incentive fee. The income-based incentive fee rewards the Adviser if our quarterly net investment income (before giving effect to any incentive fee) exceeds 1.75% (2.0% during the one year period from April 1, 2020 through March 31, 2021) of our net assets, which we define as total assets less indebtedness and before taking into account any incentive fees payable or contractually due but not payable during the period, at the end of the immediately preceding calendar quarter, adjusted appropriately for any share issuances or repurchases during the period (the “hurdle rate”). The income-based incentive fee with respect to ourpre-incentive fee net investment income is generally payable quarterly to the Adviser and is computed as follows:

no incentive fee in any calendar quarter in which ourpre-incentive fee net investment income does not exceed the hurdle ~~rate (7.0% annualized);~~rate;

100.0% of ourpre-incentive fee net investment income with respect to that portion of suchpre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% (2.4375% during the one year period from April 1, 2020 through March 31, 2021) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar ~~quarter (8.75% annualized);~~quarter; and

20.0% of the amount of ourpre-incentive fee net investment income, if any, that exceeds 2.1875% (2.4375% during the one year period from April 1, 2020 through March 31, 2021) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter.

As reflected above, on April 14, 2020, our Board of Directors approved the amendment of the Advisory Agreement, which temporarily revised the hurdle rate, for the period beginning April 1, 2020 and ending March 31, 2021, increasing the hurdle rate from 1.75% per quarter (7% annualized) to 2.00% per quarter (8% annualized) and increasing the excess incentive fee hurdle rate from 2.1875% per quarter (8.75% annualized) to 2.4375% per quarter (9.75% annualized).

The second part of the incentive fee is a capital gains-based incentive fee that ~~will be~~is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date) and equals 20.0% of our “net realized capital ~~gains~~gains” (as defined herein) as of the end of the fiscal year. In determining the capital gains-based incentive fee payable to the Adviser, we calculate ~~the cumulative aggregate~~“net realized capital ~~gains and~~gains” at the end of each applicable year by subtracting the sum of our cumulative aggregate realized capital losses ~~since~~and our ~~inception, and the~~ entire portfolio’s aggregate unrealized capital depreciation ~~if any and excluding any unrealized~~from our cumulative aggregate realized capital ~~appreciation, as of the date of the calculation.~~gains. For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the original cost of such investment since inception. Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the original cost of such investment since inception. The entire portfolio’s aggregate unrealized capital depreciation, if any, equals the sum of the difference between the valuation of each investment as of the applicable calculation date and the original cost of such investment. At the end of the applicable fiscal year, the amount of capital gains that serves as the basis for our calculation of the capital gains-based incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less the entire portfolio’s aggregate unrealized capital depreciation, if any. If this number is positive at the end of such fiscal year, then the capital gains-based incentive fee for such year equals 20.0% of such amount, less the aggregate amount of any capital gains-based incentive fees paid in respect of our portfolio in all prior years. No capital gains-based incentive fee has been recorded or paid since our inception through December 31, ~~2017,~~2020, as cumulative unrealized capital depreciation has exceeded cumulative realized capital gains net of cumulative realized capital losses.

In accordance with GAAP, a capital gains-based incentive fee accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital ~~depreciation included in the calculation of the capital gains-based incentive fee.~~appreciation and depreciation. If such amount is positive at the end of a period, then GAAP requires us to record a capital gains-based incentive fee equal to 20.0% of such amount, less the aggregate amount of actual capital gains-based incentive fees paid in all prior years. If such amount is negative, then there is no accrual for such period. GAAP requires that the capital gains-based incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains-based incentive fee would be payable if such unrealized capital appreciation were realized. There can be no assurance that such unrealized capital appreciation will be realized in the future. No GAAP accrual for a capital gains-based incentive fee has been recorded ~~or paid~~ from our inception through December 31, ~~2017.~~2020.

Our Board of Directors acceptednon-contractual, unconditional and irrevocable credits from the Adviser to reduce the income-based incentive fee to the extent net investment income did not 100.0% cover distributions to common stockholders for the three months ended December 31, ~~2017~~2020 and ~~2016.~~

~~Loan Servicing Fee~~

The Adviser also services the loans held by Business Loan (the borrower under the Credit Facility), in return for which the Adviser receives a 1.5% annual fee payable monthly based on the aggregate outstanding balance of loans pledged under our Credit Facility. As discussed in the notes to the table above, we treat payment of the loan servicing fee pursuant to our line of credit as a~~pre-payment~~ ~~of the base management fee under the Advisory Agreement. Accordingly, these loan servicing fees are 100%non-contractually,~~ ~~unconditionally and irrevocably credited back to us by the Adviser.~~2019.

Transactions with the Administrator

We ~~pay~~have entered into the Administration Agreement with the Administrator to provide administrative services. We reimburse the Administrator pursuant to the Administration Agreement for the portion of expenses the Administrator incurs while performing services for us. The Administrator’s expenses are primarily rent and the salaries, benefits and expenses of the Administrator’s employees, ~~including, but not limited to,~~including: our chief financial officer and treasurer, chief compliance officer, chief valuation officer, and general counsel and secretary (who also serves as the Administrator’s president, general counsel and secretary) and their respective staffs. Two of our executive officers, David Gladstone (our chairman and chief executive officer) and Terry Lee Brubaker (our vice chairman and chief operating officer) serve as members of the board of managers and executive officers of the Administrator, which is 100% indirectly owned and controlled by Mr. Gladstone. Another of our officers, Michael LiCalsi (our general counsel and secretary), serves as the Administrator’s president as well as the executive vice president of administration for the Adviser.

Our allocable portion of the Administrator’s expenses ~~are~~is generally derived by multiplying the Administrator’s total expenses by the approximate percentage of time during the current quarter the Administrator’s employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator. ~~These administrative fees are accrued at the end of the quarter when the services are performed and recorded on our accompanying~~~~Consolidated Statements of Operations~~ ~~and generally paid the following quarter to the Administrator.~~ On July ~~11, 2017,~~14, 2020, our Board of Directors, including a majority of the directors who are not parties to the Administration Agreement or interested persons of ~~such~~either party, approved the ~~annual~~ renewal of the Administration Agreement through August 31, ~~2018.~~2021.

Other Transactions

Gladstone Securities, LLC (“Gladstone Securities”), a privately-held broker-dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation, which is 100% indirectly owned and controlled by Mr. Gladstone, our chairman and chief executive officer, has provided other services, such as investment banking and due diligence services, to certain of our portfolio companies, for which Gladstone Securities receives a fee. Any such fees paid by portfolio companies to Gladstone Securities do not impact the fees we pay to the Adviser or thenon-contractual, unconditional and irrevocable credits against the base management fee or incentive fee. Gladstone Securities received fees from portfolio companies totaling ~~$0.5~~$0.2 million and ~~$0.1~~$0.3 million during the three months ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively.

Related Party Fees Due

Amounts due to related parties on our accompanyingConsolidated Statements of Assets and Liabilities were as follows:


	December 31, 2017			September 30, 2017		December 31, 2020		September 30, 2020
Base management fee due (from) to Adviser	$	(267	)	$	45
Base management fee due to Adviser						$	215	$	95
Loan servicing fee due to Adviser		270			242		339		355
Incentive fee due to Adviser		1,288			1,005		1,156		1,236

Total fees due to Adviser		1,291			1,292		1,710		1,686

Fee due to Administrator		272			244		434		329

Total Related Party Fees Due	$	1,563		$	1,536	$	2,144	$	2,015

In addition to the above fees, other operating expenses due to the Adviser as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, totaled ~~$16~~$22 thousand and ~~$12,~~$31 thousand, respectively. In addition, net expenses payable to Gladstone Investment Corporation (for reimbursement purposes), which includes certainco-investment expenses, totaled ~~$24~~$40 thousand and ~~$55~~$0 as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, respectively. These amounts are generally settled in the quarter subsequent to being incurred and ~~have been~~are included in other ~~assets, net and other~~ liabilities ~~as appropriate,~~ on the accompanyingConsolidated Statements of Assets and Liabilitiesas of December 31, ~~2017~~2020 and September 30, ~~2017.~~2020.

NOTE 5. BORROWINGS

Revolving Credit Facility

On ~~May 1, 2015,~~December 9, 2020, we, through Business Loan, entered into Amendment No. 8 to our Credit Facility with KeyBank, which increased the commitment amount from ~~$137.0~~$180 million to ~~$140.0~~$205 million.

On November 2, 2020, we, through Business Loan, entered into Amendment No. 7 to our Credit Facility with KeyBank, which provided consent for relevant amendments to our credit agreements with certain of our portfolio companies.

On April 29, 2020, we, through Business Loan, entered into Amendment No. 6 to our Credit Facility with KeyBank, which extended the revolving period end date to July 15, 2021, included certain LIBOR transition provisions and decreased the commitment amount from $190 million to $180 million.

On July 10, 2019, we, through Business Loan, entered into Amendment No. 5 to our Credit Facility with KeyBank, which (i) modified the covenants to reduce our minimum asset coverage with respect to senior securities representing indebtedness from 200% to 150% (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act), (ii) amended the excess concentration limits definition to decrease the limit for non-first lien loans from 60% to 50% under certain circumstances and (iii) amended the distributions covenant to allow a distribution to be applied towards the redemption of our 6.00% Series 2024 Term Preferred Stock, par value $0.001 per share (“Series 2024 Term Preferred Stock”).

On March 9, 2018, we, through Business Loan, entered into Amendment No. 4 to our Credit Facility with KeyBank, which increased the commitment amount from $170.0 million to $190.0 million, extended the revolving period end date by ~~three~~approximately two years to January ~~19, 2019,~~15, 2021, decreased the marginal interest rate added to30-day LIBOR from ~~3.75%~~3.25% to ~~3.25%~~2.85% per annum, ~~set~~and changed the unused commitment fee atfrom 0.50% ~~on all~~

~~undrawn amounts, expanded~~of the ~~scope of eligible collateral,~~total unused commitment amount to 0.50% when the average unused commitment amount for the reporting period is less than or equal to 50%, 0.75% when the average unused commitment amount for the reporting period is greater than 50% but less than or equal to 65%, and ~~amended certain other terms and conditions. If our Credit Facility~~1.00% when the average unused commitment amount for the reporting period is ~~not renewed or extended by January 19, 2019, all principal and interest will be due and payable on or before April 19, 2020 (fifteen months after the revolving period end date)~~greater than 65%. Subject to certain terms and conditions, our Credit Facility may be expanded up to a total of ~~$250.0~~$265.0 million through additional commitments of new or existing lenders. We incurred fees of approximately ~~$1.1~~$1.2 million in connection with this amendment, which are being amortized through our Credit Facility’s revolving period end date of ~~January 19, 2019.~~

On June 19, 2015, we through Business Loan entered into certain joinder and assignment agreements with three new lenders to increase borrowing capacity under our Credit Facility by $30.0 million to $170.0 million. We incurred fees of approximately $0.6 million in connection with this expansion, which are being amortized through our Credit Facility’s revolving period end date of January 19, 2019.

On October 9, 2015, August 18, 2016, and August 24, 2017, we entered into Amendments No. 1, 2 and 3 to our Credit Facility, respectively, each of which clarified or modified various constraints on available borrowings.July 15, 2021.

The following tables summarize noteworthy information related to our Credit ~~Facility (at cost):~~Facility:


	December 31, 2017		September 30, 2017		December 31, 2020		September 30, 2020
Commitment amount	$	170,000	$	170,000	$	205,000	$	180,000
Borrowings outstanding, at cost		130,500		93,000		16,300		128,000
Availability^(A)		28,940		58,576		168,807		17,641


	For the Three Months Ended December 31,						For the Three Months Ended December 31,
	2017			2016			2020			2019
Weighted average borrowings outstanding, at cost	$	98,228		$	39,278		$	105,074		$	88,160
Weighted average interest rate^(B)		5.0	%		5.7	%
Weighted average interest rate⁽^B⁾								3.6	%		5.4	%
Commitment (unused) fees incurred	$	92		$	166		$	152		$	190

^(A)	Available borrowings are subject to various constraints imposed under our Credit Facility, based on the aggregate loan balance pledged by Business Loan, which varies as loans are added and repaid, regardless of whether such repayments are prepayments or made as contractually required.

^(B)	Includes unused commitment fees and excludes the impact of deferred financing fees.

Our Credit Facility also requires that any interest or principal payments on pledged loans be remitted directly by the borrower

into a lockbox account with KeyBank. KeyBank is also the trustee of the account and generally remits the collected funds to us once aeach month. Amounts collected in the lockbox account with KeyBank are presented as Due from administrative agent on the accompanying Consolidated Statement of Assets and Liabilities as of December 31, 2020 and September 30, 2020.

Our Credit Facility contains covenants that require Business Loan to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions), and restrict material changes to our credit and collection policies without the lenders’ consent. Our Credit Facility also generally limits distributions to our stockholders on a fiscal year basis to the sum of our net investment income, net capital gains and amounts elected to have been paid during the prior year in accordance with Section 855(a) of the Code. Business Loan is also subject to certain limitations on the type of loan investments it can apply as collateral towards the borrowing base to receive additional borrowing availability under our Credit Facility, including restrictions on geographic concentrations, sector concentrations, loan size, payment frequency and status, average life and lien property. Our Credit Facility further requires Business Loan to comply with other financial and operational covenants, which obligate Business Loan to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of 25 obligors required in the borrowing base.

Additionally, we are ~~subject to a performance guaranty that requires us~~required to maintain (i) a minimum net worth (defined in our Credit Facility to include ~~our~~any outstanding mandatorily redeemable preferred stock) of $205.0 million plus 50.0% of all equity and subordinated debt raised after May 1, 2015 less 50% of any equity and subordinated debt retired or redeemed after May 1, 2015, which equates to ~~$224.1~~$323.2 million as of December 31, ~~2017,~~2020, (ii) asset coverage with respect to “senior securities representing indebtedness” of at least ~~200%,~~150% (or such percentage as may be set forth in ~~accordance with Sections~~Section 18 ~~and~~of the 1940 Act, as modified by Section 61 of the 1940 ~~Act,~~Act), and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code.

As of December 31, ~~2017,~~2020, and as defined in ~~the performance guaranty of~~ our Credit Facility, we had a net worth of ~~$274.9~~$438.5 million, asset coverage on our “senior securities representing indebtedness” of ~~310.4%~~213.2%, calculated in ~~compliance~~accordance with the requirements of Section 18 and 61 of the 1940 Act, and an active status as a BDC and RIC. In addition, we had 3532 obligors in our Credit Facility’s borrowing base as of December 31, ~~2017.~~2020. As of December 31, ~~2017,~~2020, we were in compliance with all of our Credit Facility covenants.

Fair Value

We elected to apply the fair value option of ASC 825, “Financial Instruments,” specifically for the Credit Facility, which was consistent with our application of ASC 820 to our investments. Generally, the fair value of our Credit Facility is determined using a yield analysis which includes a DCF calculation and the assumptions that the Valuation Team believes market participants would use, including ~~but not limited to,~~ the estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of

similar securities as of the measurement date. As of December 31, ~~2017,~~2020, the discount rate used to determine the fair value of our Credit Facility was30-day LIBOR, plus ~~3.00%~~3.20% per annum, plus a ~~0.50%~~1.00% unused commitment fee. As of September 30, ~~2017,~~2020, the discount rate used to determine the fair value of our Credit Facility was30-day LIBOR, plus ~~3.15%~~3.20% per annum, plus a 0.50% unused commitment fee. Generally, an increase or decrease in the discount rate used in the DCF calculation may result in a corresponding ~~increase~~decrease or ~~decrease,~~increase, respectively, in the fair value of our Credit Facility. As of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, our Credit Facility was valued using Level 3 inputs and any changes in its fair value are recorded in net unrealized depreciation (appreciation) of other on our accompanyingConsolidated Statements of Operations.

The following tables present our Credit Facility carried at fair value as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, on our accompanyingConsolidated Statements of Assets and Liabilities for Level 3 of the hierarchy established by ASC 820 and the changes in fair value of our Credit Facility during the three months ended December 31, ~~2017~~2020 and ~~2016:~~2019:

   Total Recurring Fair Value Measurement Reported in
   Consolidated Statements of Assets and LiabilitiesUsing
Significant Unobservable Inputs (Level 3)
   December 31, 2017    September 30, 2017
Credit Facility
   $ 130,833    $ 93,115


	Total Recurring Fair Value Measurement Reported in
	*Consolidated Statements of Assets and Liabilities* Using Significant Unobservable Inputs (Level 3)
	December 31, 2020		September 30, 2020
Credit Facility	$	16,270	$	127,650


Fair Value Measurements Using Significant Unobservable Data Inputs (Level 3)	Fair Value Measurements Using Significant Unobservable Data Inputs (Level 3)							Fair Value Measurements Using Significant Unobservable Data Inputs (Level 3)
		Three Months Ended December 31,
		2017			2016				Three Months Ended December 31,
Fair value as of September 30, 2017 and 2016, respectively		$	93,115		$	71,300
									2020			2019
Fair value as of September 30, 2020 and 2019, respectively									$	127,650		$	67,067
Borrowings			61,100			24,200				21,500			84,300
Repayments			(23,600	)		(67,300	)			(133,200	)		(60,400	)
Net unrealized appreciation (depreciation)^(A)			218			(213	)
Net unrealized appreciation^(A)										320			17

Fair Value as of December 31, 2017 and 2016, respectively		$	130,833		$	27,987
Fair Value as of December 31, 2020 and 2019, respectively									$	16,270		$	90,984

^(A)	Included in net unrealized appreciation (depreciation) of other on our accompanyingConsolidated Statements of Operations for the three months ended December 31, ~~2017~~2020 and ~~2016.~~2019.

The fair value of the collateral under our Credit Facility totaled approximately ~~$348.8~~$421.5 million and ~~$317.4~~$412.5 million as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, respectively.

Notes Payable

In December 2020, we completed a debt offering of $100.0 million aggregate principal amount of 5.125% Notes due 2026 (the “2026 Notes”) for net proceeds of approximately $97.7 million after deducting underwriting discounts, commissions and offering expenses borne by us. The 2026 Notes will mature on January 31, 2026 and may be redeemed in whole or in part at any time or from time to time at the Company’s option prior to maturity at par plus a “make-whole” premium, if applicable. The 2026 Notes bear interest at a rate of 5.125% per year. Interest is payable semi-annually on January 31 and July 31 of each year (which equates to approximately $5.1 million per year) beginning July 31, 2021.

In October 2019, we completed a public debt offering of $38.8 million aggregate principal amount of 5.375% Notes due 2024 (the “2024 Notes”), inclusive of the overallotment option exercised by the underwriters, for net proceeds of approximately $37.5 million after deducting underwriting discounts, commissions and offering expenses borne by us. The 2024 Notes are traded under the ticker symbol “GLADL” on the Nasdaq Global Select Market (“Nasdaq”). The 2024 Notes and will mature on November 1, 2024 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after November 1, 2021. The 2024 Notes bear interest at a rate of 5.375% per year, payable quarterly on February 1, May 1, August 1, and November 1 of each year (which equates to approximately $2.1 million per year).

In November 2018, we completed a public debt offering of $57.5 million aggregate principal amount of 6.125% Notes due 2023 (the “2023 Notes”), inclusive of the overallotment option exercised by the underwriters, for net proceeds of $55.4 million after deducting underwriting discounts, commissions and offering expenses borne by us. As of December 31, 2020, the 2023 Notes were traded under the ticker symbol GLADD on Nasdaq. On January 7, 2021, we voluntarily redeemed the 2023 Notes with an aggregate principal amount outstanding of $57.5 million. The net redemption amount was $58.1 million inclusive of accrued interest through the date of redemption. The 2021 Notes would have otherwise matured on November 1, 2023.

The indenture relating to the 2026 Notes, the 2024 Notes and the 2023 Notes contains certain covenants, including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s asset coverage meets the threshold specified in the 1940 Act after such borrowing, (ii) an inability to declare any dividend or distribution (except a dividend payable in our stock) on a class of our capital stock or to purchase shares of our capital stock unless the Company’s asset coverage meets the threshold specified in the 1940 Act at the time of (and giving effect to) such declaration or purchase, and (iii) if, at any time, we are not subject to the reporting requirements of the Exchange Act, we will provide the holders of the 2026 Notes, the 2024 Notes, and the 2023 Notes, as applicable, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.

The 2026 Notes, 2024 Notes, and 2023 Notes are recorded at the principal amount, less discounts and offering costs, on our Consolidated Statements of Assets and Liabilities.

The fair value, based on the last quoted closing price, of the 2023 Notes as of December 31, 2020 and September 30, 2020 was $58.3 million and $57.8 million, respectively. The fair value, based on the last quoted closing price, of the 2024 Notes as of December 31, 2020 and September 30, 2020 was $40.0 million and $38.7 million, respectively. We consider the trading price of the 2024 Notes and 2023 Notes to be a Level 1 input within the ASC 820 hierarchy. The fair value, based on a DCF analysis, of the 2026 Notes as of December 31, 2020 was $100.0 million. We consider the instrument to be Level 3 within the ASC 820 fair value hierarchy.

NOTE 6. MANDATORILY REDEEMABLE PREFERRED STOCK

In September 2017, we completed a public offering of approximately 2.1 million shares of ~~6.00%~~our Series 2024 Term Preferred Stock ~~par value $0.001 per share (“Series 2024 Term Preferred Stock”),~~ at a public offering price of $25.00 per share. Gross proceeds totaled $51.8 million and net proceeds, after deducting underwriting discounts, commissions and offering expenses borne by us, were approximately $49.8 million. We incurred approximately $1.9 million in total underwriting discounts and offering costs related to the issuanceThe shares of ~~the~~our Series 2024 Term Preferred Stock ~~which have been recorded~~were traded under the ticker symbol “GLADN” on Nasdaq as ~~discounts to the liquidation value on our accompanying~~~~Consolidated Statements~~ of ~~Assets and Liabilities~~ ~~and are being amortized from issuance through~~ September 30, ~~2024, the mandatory redemption date. The proceeds plus borrowings under our Credit Facility were used to~~2019.

On October 2, 2019, we voluntarily ~~redeem~~redeemed all ~~2.4 million~~2,070,000 outstanding shares of our ~~then existing 6.75%~~ Series ~~2021~~2024 Term Preferred Stock ~~par value $0.001~~at a redemption price of $25.00 per share, ~~(“Series 2021 Term Preferred Stock”).~~which represents the liquidation preference per share, plus accrued and unpaid dividends through October 1, 2019 in the amount of $0.004166 per share, for a total payment per share of $25.004166 and an aggregate redemption price of approximately $51.8 million. In connection with the voluntary redemption of our Series ~~2021~~2024 Term Preferred Stock, we incurred a loss on extinguishment of debt of ~~$1.3~~$1.4 million, ~~during the three months ended September 30, 2017,~~which has been reflected in Realized loss on other in our accompanying Consolidated Statement of Operations and which is primarily comprised of the unamortized deferred issuance costs at the time of redemption.

The shares of our Series 2024 Term Preferred Stock are traded under the ticker symbol “GLADN” on the Nasdaq Global Select Market. Our Series 2024 Term Preferred Stock is not convertible into our common stock or any other security and provides for a fixed dividend equal to 6.00% per year, payable monthly (which equates in total to approximately $3.1 million per year). We are required to redeem all of the outstanding Series 2024 Term Preferred Stock on September 30, 2024 for cash at a redemption price equal to $25.00 per share plus an amount equal to all unpaid dividends and distributions on such share accumulated to (but excluding) the date of redemption (the “Redemption Price”). We may additionally be required to mandatorily redeem some or all of the shares of our Series 2024 Term Preferred Stock early, at the Redemption Price, in the event of the following: (1) upon the occurrence of certain events that would constitute a change in control, and (2) if we fail to maintain an asset coverage of at least 200% on our “senior securities that are stock” (which is currently only our Series 2024 Term Preferred Stock) and the failure remains for a period of 30 days following the filing date of our next SEC quarterly or annual report. The asset coverage on our “senior securities that are stock” as of December 31, 2017 was 222.4%, calculated in accordance with Sections 18 and 61 of the 1940 Act.

~~We may also voluntarily redeem all or a portion of the Series 2024 Term Preferred Stock at our option at the Redemption Price at any~~

time after September 30, 2019. If we fail to redeem our Series 2024 Term Preferred Stock pursuant to the mandatory redemption date of September 30, 2024, or in any other circumstance in which we are required to mandatorily redeem our Series 2024 Term Preferred Stock, then the fixed dividend rate will increase by 4.0% for so long as such failure continues. As of December 31, 2017, we have not redeemed, nor have we been required to redeem, any shares of our outstanding Series 2024 Term Preferred Stock.

In May 2014, we completed a public offering of approximately 2.4 million shares of Series 2021 Term Preferred Stock, at a public offering price of $25.00 per share. Gross proceeds totaled $61.0 million and net proceeds, after deducting underwriting discounts, commissions and offering expenses borne by us, were approximately $58.5 million, a portion of which was used to voluntarily redeem all 1.5 million outstanding shares of our then existing 7.125% Series 2016 Term Preferred Stock, par value $0.001 per share and the remainder was used to repay a portion of outstanding borrowings under our Credit Facility. We incurred $2.5 million in total offering costs related to the issuance of our Series 2021 Term Preferred Stock, which were recorded as discounts to the liquidation value on our accompanying ~~Consolidated Statements of Assets and Liabilities~~ and were amortized over the redemption period ending June 30, 2021. In September 2017, when we voluntarily redeemed all of our outstanding Series 2021 Term Preferred Stock, the remaining unamortized costs were fully written off as part of the realized loss discussed above.

~~We paid the following monthly distributions on our Series 2024 Term Preferred Stock for the three months ended December 31, 2017:~~

Fiscal Year

Declaration Date

Record Date

Payment Date
   Distribution per
Series 2024 Term
Preferred Share^(A)
2018

October 10, 2017

October 20, 2017

October 31, 2017
   $ 0.141667

October 10, 2017

November 20, 2017

November 30, 2017
   0.125

October 10, 2017

December 19, 2017

December 29, 2017
   0.125


      Three Months Ended December 31, 2017:    $ 0.391667

~~(A)~~

~~The dividend paid on October 31, 2017 included thepro-rated~~ ~~period from and including the issuance date of September 27, 2017 to and including September 30, 2017, and the full month of October 2017.~~

~~We paid the following monthly distributions on our Series 2021 Term Preferred Stock for the three months ended December 31, 2016:~~

Fiscal Year

Declaration Date

Record Date

Payment Date
   Distribution per
Series 2021 Term
Preferred Share
2017

October 11, 2016

October 21, 2016

October 31, 2016
   $ 0.1406250

October 11, 2016

November 17, 2016

November 30, 2016
   0.1406250

October 11, 2016

December 20, 2016

December 30, 2016
   0.1406250


      Three Months Ended December 31, 2016:    $ 0.4218750

The federal income tax characteristics of dividends paid to our preferred stockholders generally constitute ordinary income to the extent of our current and accumulated earnings and profits and is reported after the end of the calendar year based on tax information for the full fiscal year. Estimates of tax characterization made on a quarterly basis may not be representative of the actual tax characterization of dividends for the full year. Estimates made on a quarterly basis are updated as of each interim reporting date. The tax characterization of dividends paid to our preferred stockholders during the calendar years ended December 31, 2017 and 2016 was 100% from ordinary income.

~~In accordance with ASC 480, “~~~~Distinguishing Liabilities from Equity~~,” mandatorily redeemable financial instruments should be classified as liabilities in the balance sheet and we have recorded our mandatorily redeemable preferred stock as a liability at cost, as of December 31, 2017 and September 30, 2017. The related dividend payments to our mandatorily redeemable preferred stockholders are treated as dividend expense on our statement of operations as of the~~ex-dividend~~ date. Aggregate preferred stockholder dividends declared and paid on our Series 2024 Term Preferred Stock for the three months ended December 31, 2017 was $0.8 million. Aggregate preferred stockholder dividends declared and paid on our Series 2021 Term Preferred Stock for the three months ended December 31, 2016 was $1.0 million.

For disclosure purposes, the fair value, based on the last quoted closing price, for our Series 2024 Term Preferred Stock as of December 31, 2017 was approximately $53.5 million. The fair value, based on the last quoted closing price, for our Series 2024 Term Preferred Stock as of September 30, 2017 was approximately $52.7 million. We consider our mandatorily redeemable preferred stock to be a Level 1 liability within the ASC 820 hierarchy.

NOTE 7. REGISTRATION STATEMENT AND COMMON EQUITY OFFERINGS ~~AND SHARE REPURCHASES~~

~~We filed Post-Effective Amendment No. 2 to our current universal~~Our shelf registration statement ~~on FormN-2~~ ~~(our “Registration Statement”) on FormN-2~~ ~~(FileNo. 333-208637)~~ ~~with the SEC on December 19, 2017, which was declared effective by the SEC on February 1, 2018. Our Registration Statement~~ permits us to issue, through one or more transactions, up to an aggregate of $300.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities and warrants to purchase common stock or preferred ~~stock or debt securities.~~stock. As of December 31, ~~2017,~~2020, we ~~have~~had the ability to issue up to ~~$220.0~~an additional $124.8 million in

securities under the ~~Registration Statement.~~registration statement.

Common Stock Offerings

Pursuant to our prior registration statement, in October 2016, we completed a public offering of 2.0 million shares of our common stock at a public offering price of $7.98 per share, which was below our then current NAV per share. In November 2016, the underwriters partially exercised their overallotment option to purchase an additional 173,444 shares of our common stock. Gross proceeds totaled $17.3 million and net proceeds, after deducting underwriting discounts and offering costs borne by us, were approximately $16.4 million.

In February ~~2015,~~2019, we entered into an equity distribution ~~agreements (commonly referred to as“at-the-market~~ ~~agreements” or the “Sales Agreements”)~~agreement with ~~KeyBanc Capital Markets Inc. and Cantor Fitzgerald & Co., each a “Sales Agent,”~~Jefferies LLC (the “Jefferies Sales Agreement”) under which we ~~had~~have the ability to issue and sell, from time to time, ~~through the Sales Agents,~~ up to an aggregate offering price of $50.0 million shares of our common stock. In May 2017, we terminated the Sales Agreement with KeyBanc Capital Markets Inc. and amended the Sales Agreement with Cantor Fitzgerald & Co. to reference our current registration statement. All other material terms of the Sales Agreement with Cantor Fitzgerald & Co. remained unchanged. During the three months ended December 31, ~~2017,~~2020, we sold ~~471,498~~923,542 shares of our common stock under the Jefferies Sales Agreement, ~~with Cantor Fitzgerald & Co.,~~ at a weighted-average price of ~~$9.69~~$8.11 per share and raised ~~$4.6~~$7.5 million of gross proceeds. Net proceeds, after deducting commissions and offering costs borne by us, were approximately ~~$4.5~~$7.4 million. As of December 31, ~~2017,~~2020, we had a remaining capacity to sell up to ~~$37.9~~an additional $13.6 million of our common stock under the Jefferies Sales ~~Agreement with Cantor Fitzgerald & Co. We did not sell any shares under the Sales Agreements during the three months ended December 31, 2016.~~Agreement.

NOTE 8. NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER WEIGHTED AVERAGE COMMON SHARE

The following table sets forth the computation of basic and diluted net increase (decrease) in net assets resulting from operations per weighted average common share for the three months ended December 31, ~~2017~~2020 and ~~2016:~~2019:

   Three Months Ended
December 31,
   2017    2016
Numerator for basic and diluted net increase in net assets
resulting from operations per common share
   $ 7,160    $ 916
Denominator for basic and diluted weighted average
common shares
   26,522,788    24,778,970




Basic and diluted net increase in net assets resulting from
operations per common share
   $ 0.27    $ 0.04


	Three Months Ended December 31,
	2020		2019
Numerator, basic and diluted net increase (decrease) in net assets resulting from operations	$	12,303	$	698
Denominator, basic and diluted weighted average common shares		32,097,542		30,513,530

Basic and diluted net increase (decrease) in net assets resulting from operations per weighted average common share	$	0.38	$	0.02

NOTE 9. DISTRIBUTIONS TO COMMON STOCKHOLDERS

To qualify to be taxed as a RIC under Subchapter M of the Code, we must generally distribute to our stockholders, for each taxable year, at least 90% of our taxable ordinary income plus the excess of our net short-term capital gains over net long-term capital losses (“Investment Company Taxable Income”). The amount to be paid out as distributions to our stockholders is determined by our Board of Directors quarterly and is based on management’s estimate of ~~the fiscal year earnings.~~Investment Company Taxable Income. Based on that estimate, our Board of Directors declares three monthly distributions to common stockholders each quarter.

The federal income tax characteristics of all distributions will be reported to stockholders on the IRS Form 1099 atafter the end of each calendar year. For the calendar ~~years~~year ended December 31, ~~2017 and 2016, 100%~~2020, 97.3% of distributions to common stockholders ~~during these periods~~ were deemed to be paid from ordinary income and 2.7% of distributions to common stockholders were deemed to be a return of capital for 1099 stockholder reporting purposes. For the calendar year ended December 31, 2019, 97.4% of distributions to common stockholders were deemed to be paid from ordinary income and 2.6% of distributions to common stockholders were deemed to be a return of capital for 1099 stockholder reporting purposes.

We paid the following monthly distributions to common stockholders for the three months ended December 31, ~~2017~~2020 and ~~2016:~~2019:

Fiscal Year

Declaration
Date

Record Date

Payment Date
   Distribution
per Common
Share
2018

October 10, 2017

October 20, 2017

October 31, 2017
   $ 0.07

October 10, 2017

November 20, 2017

November 30, 2017
   0.07

October 10, 2017

December 19, 2017

December 29, 2017
   0.07


      Three Months Ended December 31, 2017:    $ 0.21


2017

October 11, 2016

October 21, 2016

October 31, 2016
   $ 0.07

October 11, 2016

November 17, 2016

November 30, 2016
   0.07

October 11, 2016

December 20, 2016

December 30, 2016
   0.07


      Three Months Ended December 31, 2016:    $ 0.21


Fiscal Year	Declaration Date	Record Date	Payment Date	Distribution per Common Share
2021	October 13, 2020	October 23, 2020	October 30, 2020	$	0.065
	October 13, 2020	November 20, 2020	November 30, 2020		0.065
	October 13, 2020	December 23, 2020	December 31, 2020		0.065

		Three Months Ended December 31, 2020:			$0.195

2020	October 8, 2019	October 22, 2019	October 31, 2019	$	0.07
	October 8, 2019	November 19, 2019	November 29, 2019		0.07
	October 8, 2019	December 19, 2019	December 31, 2019		0.07

		Three Months Ended December 31, 2019:			$0.21

Aggregate distributions declared and paid to our common stockholders were approximately ~~$5.6~~$6.3 million and ~~$5.2~~$6.4 million for the three months ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively, and were declared based on estimates of ~~investment company taxable~~

~~income~~Investment Company Taxable Income for the respective fiscal years. For the fiscal year ended September 30, ~~2017, our current and accumulated earnings and profits (after taking into account our mandatorily redeemable preferred stock dividends), exceeded common stock~~2020, distributions declared and paid ~~and, in accordance with Section 855(a) of the Code, we elected to treat $0.3 million of the first~~exceeded taxable income available for common distributions ~~paid~~resulting in ~~fiscal year 2018 as having been paid in the respective prior year.~~a partial return of capital of approximately $0.4 million.

For the three months ended December 31, ~~2017~~2020 and the fiscal year ended September 30, ~~2017,~~2020, we recorded the following adjustments forbook-tax differences to reflect tax character. Results of operations, total net assets, and cash flows were not affected by these adjustments.


	Three Months Ended December 31, 2017			Year Ended September 30, 2017			Three Months Ended December 31, 2020			Year Ended September 30, 2020
Over distributed net investment income	$	(68	)	$	(4,416	)
Undistributed net investment income							$	(20	)	$	(175	)
Accumulated net realized losses		260			6,541			200			2,610
Capital in excess of par value		(192	)		(2,125	)		(180	)		(2,435	)

NOTE 10. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are party to certain legal proceedings incidental to the normal course of our business. We are required to establish reserves for litigation matters where those matters present loss contingencies that are both probable and estimable. When loss contingencies are not both probable and estimable, we do not establish reserves. Based on current knowledge, we do not believe that loss contingencies, if any, arising from pending investigations, litigation or regulatory matters will have a material adverse effect on our financial condition, results of operations or cash flows. Additionally, based on our current knowledge, we do not believe such loss contingencies are both probable and estimable and therefore, as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, we ~~have not~~had no established reserves for such loss contingencies.

Escrow Holdbacks

From time to time, we ~~will~~ enter into arrangements ~~as it relates~~relating to exits of certain investments whereby specific amounts of the proceeds are held in escrow ~~in order~~ to be used to satisfy potential obligations, as stipulated in the sales agreements. We record escrow amounts in ~~restricted~~Restricted cash and cash equivalents, if received in cash but subject to potential obligations or other contractual restrictions, or as escrow receivables in Other assets, net, if not yet received in cash, on our accompanyingConsolidated Statements of Assets and Liabilities. We establish ~~a reserve~~reserves and holdbacks against ~~the~~ escrow amounts if we determine that it is probable and estimable that a portion of the escrow amounts will not ultimately be ~~ultimately~~released or received at the end of the escrow period. There were no aggregate reserves recorded against the escrow amounts as of December 31, ~~2017~~2020 and September 30, ~~2017.~~2020.

Financial Commitments and Obligations

We have lines of credit, delayed draw term loans, and an uncalled capital commitment with certain of our portfolio companies that have not been fully drawn. Since these commitments have expiration dates and we expect many will never be fully drawn, the total commitment amounts do not necessarily represent future cash requirements. We estimate the fair value of the combined unused lines of credit, the unused delayed draw term loans and the uncalled capital commitment as of December 31, ~~2017~~2020 and September 30, ~~2017~~2020 to be immaterial.

The following table summarizes the amounts of our unused lines of credit, delayed draw term loans and uncalled capital commitment, at cost, as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, which are not reflected as liabilities in the accompanyingConsolidated Statements of Assets and Liabilities:


	December 31,		September 30,		December 31,		September 30,
	2017		2017		2020		2020
Unused line of credit commitments	$	10,426	$	7,517	$	21,746	$	18,896
Delayed draw term loans		12,900		10,900		11,230		8,030
Uncalled capital commitment		986		1,367		843		843

Total	$	24,312	$	19,784	$	33,819	$	27,769

NOTE 11. FINANCIAL HIGHLIGHTS


	Three Months Ended December 31,						Three Months Ended December 31,
	2017			2016			2020			2019
Per Common Share Data^(A):
Net asset value at beginning of period^(A)	$	8.40		$	8.62		$	7.40		$	8.22

Income from operations^(B)
Net investment income^(B)		0.21			0.21			0.20			0.21
Net realized and unrealized gain (loss) on investments		0.07			(0.18	)		0.19			(0.14	)
Net realized and unrealized (loss) gain on other		(0.01	)		0.01
Net realized and unrealized loss on other								(0.01	)		(0.05	)

Total from operations		0.27			0.04			0.38			0.02

Distributions to common stockholders from^(B)(C)
Net Investment Income		(0.21	)		(0.21	)
Net investment income								(0.19	)		(0.21	)
Return of capital								(0.01	)		—

Total distributions		(0.21	)		(0.21	)		(0.20	)		(0.21	)

Capital share transactions^(B)
Offering costs for issuance of common stock		—			(0.04	)
Anti-dilutive (dilutive) effect of common stock issuance^(D)		0.02			(0.06	)
Net anti-dilutive effect of equity offering^(D)								0.03			0.05

Total capital share transactions		0.02			(0.10	)		0.03			0.05

Other, net^(B)(E)		—			0.01

Net asset value at end of year^(A)	$	8.48		$	8.36
Net asset value at end of period^(A)							$	7.61		$	8.08

Per common share market value at beginning of period	$	9.50		$	8.13		$	7.41		$	9.75
Per common share market value at end of period		9.21			9.39			8.86			9.93
Total return^(F)		(0.91	)%		18.40	%
Common stock outstanding at end of year^(A)		26,632,182			25,517,866
Total return^(E)								22.46	%		3.96	%
Common stock outstanding at end of period^(A)								32,490,392			31,050,954

Statement of Assets and Liabilities Data:
Net assets at end of year	$	225,717		$	213,385
Average net assets^(G)		225,202			214,052
Net assets at end of period							$	247,117		$	250,789
Average net assets^(F)								241,444			249,312
Senior securities Data:
Borrowings under Credit Facility, at cost	$	130,500		$	28,200		$	16,300		$	90,800
Mandatorily redeemable preferred stock		51,750			61,000
Notes Payable								196,313			96,313
Ratios/Supplemental Data:
Ratio of net expenses to average net assets^(H)(I)		9.38			8.91
Ratio of net investment income to average net assets^(J)		9.90			9.73
Ratio of net expenses to average net assets^(G)(H)								10.94	%		9.21	%
Ratio of net investment income to average net assets^(I)								10.40	%		10.30	%

^(A)	Based on actual shares outstanding at the end of the corresponding period.

^(B)	Based on weighted average basic per share data.

^(C)	The tax character of distributions ~~are~~is determined based on taxable income calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP.

^(D)

During the three months ended December 31, ~~2017,~~2020 and 2019, the anti-dilution was a result of issuing common shares during the period at a price above the then current NAV per share. ~~During the three months ended December 31, 2016, the dilution was a result of issuing common shares during the period at a price below the then current NAV per share.~~

^(E)	Represents the impact of the different share amounts (weighted average shares outstanding during the fiscal year and shares outstanding at the end of the fiscal year) in the per share data calculations and rounding impacts.

^(F)

Total return equals the change in the ending market value of our common stock from the beginning of the fiscal year, taking into account distributions reinvested in accordance with the terms of our dividend reinvestment plan. Total return does not take into account distributions that may be characterized as a return of capital. For further information on the estimated character of our distributions to common stockholders, refer to Note 9—Distributions to Common Stockholders.

^(G)(F)

Computed using the average of the balance of net assets at the end of each month of the reporting period.

^(H)(G)

Ratio of net expenses to average net assets is computed using total expenses, net of credits from the Adviser, to the base management, loan servicing and incentive fees.

^(I)(H)

Had we not received any ~~voluntary,~~non-contractual, unconditional and irrevocable credits of ~~the incentive fee due to~~fees from the Adviser, the ratio of net expenses to average net assets would have been ~~9.53%~~14.29% and ~~8.98%~~13.62% for the ~~quarters~~three months ended December 31, ~~2017~~2020 and ~~2016.~~2019, respectively.

^(J)(I)

Had we not received any ~~voluntary,~~non-contractual, unconditional and irrevocable credits of ~~the incentive fee due to~~fees from the Adviser, the ratio of net investment income to average net assets would have been ~~9.76%~~7.12% and ~~9.66%~~5.96% for the ~~quarters~~three months ended December 31, ~~2017~~2020 and ~~2016.~~2019, respectively.

NOTE 12. UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES

In accordance with the SEC’s RegulationS-X, we do not consolidate portfolio company investments. Further, in accordance with ASC 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries.

We did not have any unconsolidated subsidiaries that met any of the significance conditions under Rule 1-02(w)(2) of the SEC’s Regulation S-X as of or during the three month period ended December 31, 2020. We had ~~three~~two unconsolidated subsidiaries, Defiance ~~Integrated Technologies, Inc.,~~and PIC 360, LLC, ~~and Sunshine Media Holdings, that~~which met at least one of the significance conditions under Rule1-02(w) of the SEC’s RegulationS-X as of or during ~~at least one of~~ the three month ~~periods~~period ended December 31, ~~2017 and 2016.~~2019. Accordingly, summarized, comparative financial information ~~in aggregate,~~ is presented below for our unconsolidated significant subsidiaries for the three months ended December 31, ~~2017~~2020 and ~~2016 for our unconsolidated significant subsidiaries.~~2019.


	Three Months Ended December 31,					Three Months Ended December 31,
Income Statement	2017		2016			2020		2019
Net sales	$	8,822	$	8,648		$	9,100	$	7,191
Gross profit		1,877		2,172			1,809		950
Net loss		40		(702	)
Net gain (loss)							462		(127	)

NOTE 13. SUBSEQUENT EVENTS

~~Portfolio Activity~~Debt Redemption

InOn January ~~2018,~~7, 2021, we ~~invested $8.1~~voluntarily redeemed the 2023 Notes with an aggregate principal amount outstanding of $57.5 million. The net redemption amount was $58.1 million ~~in XMedius Solutions Inc.~~inclusive of accrued interest through ~~secured first lien debt.~~the date of redemption.

Distributions and Dividends

In January ~~2018,~~2021, our Board of Directors declared the following monthly distributions to common ~~stockholders and monthly dividends to preferred~~ stockholders:


Record Date	Payment Date	Distribution per Common Share
January 22, 2021	January 29, 2021	$	0.065
February 17, 2021	February 26, 2021		0.065
March 18, 2021	March 31, 2021		0.065

	Total for the Quarter:	$	0.195

ITEM 2.

~~ITEM 2.~~ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All statements contained herein, other than historical facts, may constitute “forward-looking statements.” These statements may relate to, among other things, our future operating results, our business prospects and the prospects of our portfolio companies, actual and potential conflicts of interest with Gladstone Management Corporation (the “Adviser”), our adviser, and its affiliates, the use of borrowed money to finance our investments, the adequacy of our financing sources and working capital, and our ability toco-invest, among other factors. In some cases, you can identify forward-looking statements by terminology such as “estimate,” “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “project,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative or variations of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such factors ~~include, but are not limited to:~~include: (1) ~~the recurrence or impact of adverse events~~changes in the economy and the capital markets, including stock price volatility; (2) risks associated with negotiation and consummation of pending and future transactions; (3) the loss of one or more of our executive officers, in particular David Gladstone, Terry Lee Brubaker or Robert L. Marcotte; (4) changes in our investment objectives and strategy; (5) availability, terms (including the possibility of interest rate volatility) and deployment of capital; (6) changes in our industry, interest rates, exchange rates or the general economy; (7) our business prospects and the prospects of our portfolio companies; (8) the degree and nature of our competition; ~~(8)~~(9) changes in governmental regulation, tax rates and similar matters; (10) our ability to exit investments in a timely manner; (11) our ability to maintain our qualification as a ~~RIC~~regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and as a business development ~~company; and (9)~~company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”); (12) those factors described herein, including Item 1A. “Risk ~~Factors”~~Factors,” and in the “Risk Factors” ~~sections~~section of our Annual Report on Form10-K (our “Annual Report”) for the fiscal year ended September 30, 2020, filed with the U.S. Securities and Exchange Commission (“SEC”) on November ~~20, 2017.~~10, 2020 and (13) the impact of COVID-19 on the economy, our portfolio companies and the capital markets, including the measures taken by governmental authorities to address it, which may precipitate or exacerbate other risks and/or uncertainties. Additionally, many of the risks and uncertainties listed above, among others, are currently elevated by and may or will continue to be elevated by the COVID-19 pandemic. We caution readers not to place undue reliance on any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from historical performance. We have based forward-looking statements on information available to us on the date of this report. Except as required by the federal securities laws, we undertake no obligation to publicly update or revise or any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form10-Q. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC from time to time, including annual reports on Form10-K, quarterly reports on Form10-Q and current reports on Form8-K. The forward-looking statements contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended.

The following analysis of our financial condition and results of operations should be read in conjunction with our accompanyingConsolidated Financial Statements and the notes thereto contained elsewhere in this Quarterly Report on Form10-Q and in our Annual Report. Historical financial condition and results of operations and percentage relationships among any amounts in the financial statements are not necessarily indicative of financial condition or results of operations for any future periods. Except per share amounts, dollar amounts in the tables included herein are in thousands unless otherwise indicated.

OVERVIEW

General

We were incorporated under the Maryland General Corporation Law on May 30, 2001. We operate as an externally managed,closed-end,non-diversified management investment company, and have elected to be treated as a ~~business development company (“BDC”)~~BDC under the ~~Investment Company Act of~~ 1940 ~~as amended (the “1940 Act”).~~Act. In addition, for federal income tax purposes we have elected to be treated as a ~~regulated investment company (“RIC”)~~RIC under ~~Subchapter M of~~ the ~~Internal Revenue Code of 1986, as amended (the “Code”).~~Code. To continue to qualify as a RIC for federal income tax purposes and obtain favorable RIC tax treatment, we must meet certain requirements, including certain minimum distribution requirements.

We were established for the purpose of investing in debt and equity securities of established private businesses operating in the U.S. Our investment objectives are to: (1) achieve and grow current income by investing in debt securities of established lower middle market businesses that we believe will provide stable earnings and cash flow to pay expenses, make principal and interest payments on our outstanding indebtedness and make distributions to stockholders that grow over time; and (2) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities of established businesses that we believe can grow over time to permit us to sell our equity investments for capital gains. To achieve our investment objectives, our investment strategy is to invest in several categories of debt and equity securities, with each investment generally ranging from $8$7 million to $30 million, although investment size may vary, depending upon our total assets or available capital at the time of investment. We expect that our investment portfolio over time will consist of approximately 90.0% debt investments and 10.0% equity investments, at cost. As of December 31, ~~2017,~~2020, our investment portfolio was made up of approximately ~~90.6%~~92.0% debt investments and ~~9.4%~~8.0% equity investments, at cost.

We focus on investing in lower middle market companies (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization of $3 million to ~~$15~~$25 million) in the U.S. that meet certain criteria, including ~~but not limited to,~~ the following: the sustainability of the business’ free cash flow and its ability to grow it over time, adequate assets for loan

collateral, experienced management teams with a significant ownership interest in the borrower, reasonable capitalization of the borrower, including an ample equity contribution or cushion based on prevailing enterprise valuation multiples and, to a lesser extent, the potential to realize appreciation and gain liquidity in our equity position, if any. We lend to borrowers that need funds for growth capital or to finance acquisitions or recapitalize or refinance their existing debt facilities. We seek to avoid investing in high-risk, early-stage enterprises. Our targeted portfolio companies are generally considered too small for the larger capital marketplace.

We invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the ~~opportunity and have opportunistically made several~~opportunity. In July 2012, the SEC granted us an exemptive order (the ~~co-investments~~“Co-Investment Order”) that expanded our ability to co-invest, under certain circumstances, with certain of our ~~affiliate~~affiliates, including Gladstone Investment Corporation, a BDC also managed by ~~our Advisor,~~the Adviser, and any future BDC or closed-end management investment company that is advised (or sub-advised if it controls the fund) by the Adviser, or any combination of the foregoing, subject to the conditions in the Co-Investment Order. Since 2012, we have opportunistically made several co-investments with Gladstone Investment Corporation pursuant to ~~an exemptive order granted by~~ the ~~SEC.~~Co-Investment Order. We believe ~~this ability to~~the ~~co-invest~~Co-Investment Order has enhanced and will continue to enhance our ability to further our investment objectives and strategies. If we are participating in an investment with one or moreco-investors, our investment is likely to be smaller than if we were investing alone.

We are externally managed by ~~Gladstone Management Corporation (the “Adviser”),~~the Adviser, an investment adviser registered with the SEC and an affiliate of ours, pursuant to an investment advisory and management ~~agreement (the “Advisory Agreement”).~~agreement. The Adviser manages our investment activities. We have also entered into an administration agreement ~~(the “Administration Agreement”)~~ with Gladstone Administration, LLC (the “Administrator”), an affiliate of ours and the Adviser, whereby we pay separately for administrative services.

Additionally, Gladstone Securities, LLC (“Gladstone Securities”), a privately-held broker-dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation, which is 100% indirectly owned and controlled by Mr. Gladstone, our chairman and chief executive officer, has provided other services, such as investment banking and due diligence services, to certain of our portfolio companies, for which Gladstone Securities receives a fee.

Business

Portfolio and Investment Activity

In general, our investments in debt securities have a term of no more than seven years, accrue interest at variable rates (generally based on the~~one-month~~30-day ~~LIBOR)~~London Interbank Offered Rate (“LIBOR”)) and, to a lesser extent, at fixed rates. We seek debt instruments that pay interest monthly or, at a minimum, quarterly, may have a success fee or deferred interest provision and are primarily interest only, with all principal and any accrued but unpaid interest due at maturity. Generally, success fees accrue at a set rate and are contractually due upon a change of control of a portfolio company, typically from an exit or sale. Some debt securities have deferred interest whereby some portion of the interest payment is added to the principal balance so that the interest is paid, together with the principal, at maturity. This form of deferred interest is often called ~~PIK~~paid-in-kind (“PIK”) interest.

Typically, our equity investments consist of common stock, preferred stock, limited liability company interests, or warrants to purchase the foregoing. Often, these equity investments occur in connection with our original investment, recapitalizing a business, or refinancing existing debt.

During the three months ended December 31, ~~2017,~~2020, we invested ~~$56.3~~$29.0 million in ~~seven~~two new portfolio companies and extended ~~$1.6~~$0.1 million ofin investments to existing portfolio companies. In addition, during the three months ended December 31, ~~2017,~~2020, we exited three portfolio companies through ~~sales and~~ early payoffs. We received a total of ~~$19.8~~$34.1 million in combined net proceeds and principal repayments from the aforementioned portfolio company exits, as well as principal repayments by existing portfolio companies, during the three months ended December 31, ~~2017.~~2020. This activity resulted in a net ~~increase~~decrease in our overall portfolio by ~~four~~one portfolio ~~companies to 51~~company (to 47) and a net ~~increase~~decrease of ~~$38.7~~$6.5 million in our portfolio at cost since September 30, ~~2017.~~2020. From our initial public offering in August 2001 through December 31, ~~2017,~~2020, we have made ~~481~~557 different loans to, or investments in, ~~224~~248 companies for a total of approximately ~~$1.7~~$2.1 billion, before giving effect to principal repayments on investments and divestitures.

During the three months ended December 31, ~~2017,~~2020, the following significant transactions occurred:

Proprietary Investments

In ~~October 2017,~~December 2020, we ~~sold~~invested $19.0 million in Effective School Solutions LLC through secured first lien debt.

In December 2020, we invested $10.0 million in Encore Dredging Holdings, LLC through a combination of secured first lien debt and equity.

In December 2020, our investment in ~~Flight Fit N Fun~~Aerospace Engineering, LLC paid off at par for net proceeds of $20.2 million. In conjunction with the payoff, we received a prepayment fee of $0.2 million.

Syndicated Investments

In December 2020, our investment in Edmentum Ultimate Holdings, LLC was sold, which resulted in a realized ~~gain~~loss of ~~$0.6 million.~~approximately $2.4 million on our equity investment. In connection with the sale, we received net cash proceeds of approximately ~~$9.4~~$4.9 million, including the repayment of our debt investment of ~~$7.8~~$4.6 million at par.

In ~~October 2017, we invested $11.0 million~~December 2020, our investment in ~~Applied Voice & Speech Technologies, Inc. through secured first lien debt.~~

~~In October 2017, PSC Industrial~~Vertellus Holdings LLC ~~paid off at par for~~was sold, which resulted in a realized loss of approximately $41 thousand. In connection with the sale, we received net cash proceeds of ~~$3.5 million.~~

~~In November 2017, we invested $7.5~~approximately $4.1 million, ~~in Arc Drilling Holdings, LLC through secured first lien~~including the repayment of our debt ~~and equity.~~

~~In November 2017, we invested $7.5~~investment of $1.1 million ~~in Gray Matter Systems, LLC through secured second lien debt.~~

~~In November 2017, DataPipe, Inc. paid off~~ at ~~par for net proceeds of $2.0 million.~~par.

~~In November 2017, we invested $5.0 million in DigiCert Holdings, Inc. through secured second lien debt.~~

~~In November 2017, we invested $4.0 million in Red Ventures, LLC through secured second lien debt.~~

~~In November 2017, we invested $1.0 million in ABG Intermediate Holdings 2, LLC through secured second lien debt.~~

~~In December 2017, we invested $20.0 million in Impact! Chemical Technologies, Inc. through secured first lien debt.~~

~~Refer to Note 13—~~~~Subsequent Events~~ ~~in the accompanying~~~~Consolidated Financial Statements~~ ~~included elsewhere in this Quarterly Report on Form10-Q~~ ~~for portfolio activity occurring subsequent to December 31, 2017.~~

Capital Raising

We have been able to meet our capital needs through extensions of and increases to our line of credit under the Fifth Amended and Restated Credit ~~Facility~~Agreement with KeyBank National Association (“KeyBank”), as administrative agent, lead arranger and lender (as amended, our “Credit Facility”) and by accessing the capital markets in the form of public equity offerings of common and preferred ~~stock.~~stock and public debt offerings. We have successfully extended the Credit Facility’s revolving period multiple times, most recently to ~~January 2019,~~July 2021, and currently have a total commitment amount of ~~$170.0~~$205.0 million. ~~Additionally, we issued 2.1 million~~We sold 923,542 and 705,031 common shares ofunder our 6.00% Series 2024 Term Preferred Stock, par value $0.001 per share (“Series 2024 Term Preferred Stock”) at a public offering price of $25 per share, for gross proceeds of $51.8 million in September 2017, inclusive of the overallotment and approximately 2.2 million shares of our common stock for gross proceeds of $17.3 million in October 2016, inclusive of the November 2016 overallotment. Additionally,at-the-market program during the three months ended December 31, ~~2017,~~2020 and 2019, respectively. In December 2020, we ~~sold 471,498 shares~~completed a debt offering of $100.0 million aggregate principal amount of our ~~common stock under~~5.125% Notes due 2026 (the “2026 Notes”). In October 2019, we completed a public debt offering of $38.8 million aggregate principal amount of our~~at-the-market~~ ~~program at~~ 5.375% Notes due 2024 (the “2024 Notes”), inclusive of the overallotment and in November 2018, we completed a ~~weighted-average price~~public debt offering of ~~$9.69 per share and raised $4.6~~$57.5 million aggregate principal amount of ~~gross proceeds.~~our 6.125% Notes due 2023 (the “2023 Notes”), inclusive of the overallotment. Refer to “Liquidity and Capital Resources — Revolving Credit Facility,”“Liquidity and Capital Resources — Equity — Common Stock,”” and “Liquidity and Capital Resources — ~~Equity — Term Preferred Stock~~Notes Payable”” for further ~~discussion of our common stock and mandatorily redeemable preferred stock and “~~~~Liquidity and Capital Resources — Revolving Credit Facility~~~~” for further discussion of the Credit Facility.~~discussion.

Although we were able to access the capital markets historically and in recent years, ~~we believe uncertain~~ market conditions, ~~could~~including the impact of COVID-19, may continue to affect the trading price of our capital stock and thus may inhibit our ability to finance new investments through the issuance of equity. When our common stock trades below ~~NAV~~net asset value (“NAV”) per common share, ~~as it has often done in previous years,~~ our ability to issue equity is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock below NAV per common share without first obtaining approval from our stockholders and our independent directors, other than through sales to our then-existing stockholders pursuant to a rights offering. We did not request that our stockholders approve the Company’s ability to issue shares of common stock at a price below NAV at our annual meeting of stockholders held on February 9, 2017. We are not requesting that our stockholders approve the Company’s ability to issue shares of common stock at a price below NAV at the Company’s 2018 Annual Meeting of Stockholders to be held on February 8, 2018. Should we decide to issue shares of common stock at a price below NAV in the future, we will seek the requisite approval of our stockholders at such time.

On ~~February 2, 2018,~~December 31, 2020, the closing market price of our common stock was ~~$9.09~~$8.86 per share, a ~~7.2%~~16.4% premium to our December 31, ~~2017~~2020 NAV per share of ~~$8.48.~~$7.61.

Regulatory Compliance

Our ability to seek external debt financing, to the extent that it is available under current market conditions, is further subject to the asset coverage limitations of the 1940 Act, which require us to have an asset coverage (as defined in Sections 18 and 61 of the 1940 Act) of at least ~~200%~~150% on our “senior securities representing indebtedness” and our “senior securities that are stock.”

On April 10, 2018, our Board of Directors, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, the Company’s asset coverage requirements for senior securities changed from 200% to 150%, effective April 10, 2019.

As of December 31, ~~2017,~~2020, our asset coverage on our “senior securities representing indebtedness” was ~~310.4% and our asset coverage on our “senior securities that are stock” was 222.4%~~213.2%.

Recent Developments

~~Portfolio and Investment Activity~~Debt Redemption

the date of redemption.

Distributions

OnIn January ~~9, 2018,~~2021, our Board of Directors declared the following monthly ~~cash~~ distributions to common ~~and preferred~~ stockholders:

Record Date

Payment Date
   Distribution
per Common
Share    Distribution per
Series 2024 Term
Preferred Share
January 22, 2018
   January 31, 2018    $ 0.07    $ 0.125
February 16, 2018
   February 28, 2018    0.07    0.125
March 20, 2018
   March 30, 2018    0.07    0.125




   Total for the Quarter    $ 0.21    $ 0.375




Record Date
   Payment Date    Distribution
per Common
Share
January 22, 2021
   January 29, 2021    $ 0.065
February 17, 2021
   February 26, 2021    0.065
March 18, 2021
   March 31, 2021    0.065


Total for the Quarter:
      $ 0.195


LIBOR Transition
In general, our investments in debt securities have a term of five years, accrue interest at variable rates (based on the one-month LIBOR) and, to a lesser extent, at fixed rates. LIBOR is currently anticipated to be phased out in June 2023. LIBOR is currently expected to transition to a new standard rate, the Secured Overnight Financing Rate (“SOFR”), which will incorporate certain overnight repo market data collected from multiple data sets. To attain an equivalent one-month rate, we currently intend to adjust the SOFR to minimize the difference between the interest that a borrower would be paying using LIBOR versus what it will be paying using SOFR. We are currently monitoring the transition and cannot assure you whether SOFR will become a standard rate for variable rate debt. However, we expect we will need to renegotiate certain loan documents with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established. Assuming that SOFR replaces LIBOR and is appropriately adjusted to equate to one-month LIBOR, we expect that there should be minimal impact on our operations.
41COVID-19
We continue to monitor and work with the management teams and shareholders of our portfolio companies to navigate the significant market, operational and economic challenges created by the COVID-19 pandemic. The Company��s investment portfolio continues to be focused on a diversified mix of industries and sectors that are generally expected to be more durable than industries or sectors that are more prone to economic cycles including consumer or retail industries. We believe our portfolio companies have taken immediate actions to effectively and efficiently respond to the challenges posed by COVID-19 and related orders imposed by state and local governments including paused or reversed reopening orders, including developing liquidity plans supported by internal cash reserves, shareholder support, and, as appropriate, accessing the government Paycheck Protection Program. We believe we have sufficient levels of liquidity to support our existing portfolio companies, as necessary, and selectively deploy capital in new investment opportunities.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended December 31, ~~2017,~~2020 to the Three Months Ended December 31, ~~2016~~2019


	Three Months Ended December 31,												Three Months Ended December 31,
	2017			2016			$ Change			% Change			2020			2019			$ Change			% Change
INVESTMENT INCOME
Interest income	$	10,670		$	8,633		$	2,037			23.6	%	$	12,082		$	11,456		$	626			5.5	%
Other income		189			1,341			(1,152	)		(85.9	)		800			703			97			13.8

Total investment income		10,859			9,974			885			8.9			12,882			12,159			723			5.9

EXPENSES
Base management fee		1,676			1,378			298			21.6			2,002			1,852			150			8.1
Loan servicing fee		1,186			983			203			20.7			1,348			1,403			(55	)		(3.9	)
Incentive fee		1,373			1,293			80			6.2			1,367			1,394			(27	)		(1.9	)
Administration fee		272			300			(28	)		(9.3	)		355			371			(16	)		(4.3	)
Interest expense on borrowings		1,231			556			675			121.4
Interest expense on borrowings and notes payable														2,568			2,537			31			1.2
Dividend expense on mandatorily redeemable preferred stock		776			1,029			(253	)		(24.6	)		—			9			(9	)		(100.0	)
Amortization of deferred financing fees		248			273			(25	)		(9.2	)		418			361			57			15.8
Other expenses		547			637			(90	)		(14.1	)		542			531			11			2.1

Expenses, before credits from Adviser		7,309			6,449			860			13.3			8,600			8,458			142			1.7
Credit to base management fee – loan servicing fee		(1,186	)		(983	)		(203	)		(20.7	)		(1,348	)		(1,403	)		55			(3.9	)
Credits to fees from Adviser - other		(841	)		(699	)		(142	)		(20.3	)		(650	)		(1,313	)		663			(50.5	)

Total expenses, net of credits		5,282			4,767			515			10.8			6,602			5,742			860			15.0

NET INVESTMENT INCOME		5,577			5,207			370			7.1			6,280			6,417			(137	)		(2.1	)

NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on investments and other		441			(3,448	)		3,889			112.8
NET REALIZED AND UNREALIZED (LOSS) GAIN
Net realized gain (loss) on investments														(2,144	)		(4,434	)		2,290			(51.6	)
Net realized gain (loss) on other														(8	)		(1,407	)		1,399			(99.4	)
Net unrealized appreciation (depreciation) of investments		1,360			(1,055	)		2,415			228.9			8,495			139			8,356			NM
Net unrealized (appreciation) depreciation of other		(218	)		212			(430	)		(202.8	)
Net unrealized appreciation of other														(320	)		(17	)		(303	)		NM

Net gain (loss) from investments and other		1,583			(4,291	)		5,874			136.9	%		6,023			(5,719	)		11,742			(205.3	)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	7,160		$	916		$	6,244			681.7	%
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS													$	12,303		$	698		$	11,605			NM

NM = Not Meaningful

Investment Income

Interest income increased by ~~23.6%~~5.5% for the three months ended December 31, ~~2017,~~2020, as compared to the prior ~~year. This~~year period. The increase was due primarily to ~~an increase in the weighted average yield on and~~ an increase in the weighted average principal balance of our interest bearing portfolio, partially offset by a decrease in the weighted average yield on our interest bearing portfolio. The weighted average principal balance of our interest-bearing investment portfolio for the three months ended December 31, 2020, was $443.4 million, compared to $401.4 million for the three months ended December 31, 2019, an increase of $42.0 million, or 10.5%. The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which ~~increased~~decreased to ~~12.0%~~10.8% for the three months ended December 31, ~~2017,~~2020, compared to 11.3% for the three months ended December 31, ~~2016,~~2019, inclusive of any allowances on interest receivables made during those periods. The ~~weighted average principal balance of our interest-bearing investment portfolio during~~decrease was driven mainly by a decrease in LIBOR over the ~~three months ended December 31, 2017, was $353.4 million, compared to $298.8 million for the prior year, an increase of $54.6 million, or 18.3%.~~two respective periods and competitive marketplace conditions.

As of December 31, ~~2017, two~~2020 and September 30, 2020, loans to one portfolio ~~companies, Sunshine Media Holdings (“Sunshine”) and Alloy Die Casting Co.~~company, B+T Group Acquisition Inc. were ~~either fully or partially~~ onnon-accrual status with an aggregate debt cost basis of ~~approximately $27.9~~$7.2 million, or ~~6.8% of the cost basis of all debt investments in our portfolio. As of December 31, 2016, one portfolio company, Sunshine, was partially onnon-accrual~~ ~~status, with an aggregate debt cost basis of approximately $19.1 million, or 6.1%~~1.6% of the cost basis of all debt investments in our portfolio.

Other income ~~decreased~~increased by ~~85.9%~~13.8% during the three months ended December 31, ~~2017,~~2020, as compared to the prior ~~year. This decrease was~~year period, primarily due to ~~a $1.5 million decrease~~an increase in ~~success fees recognized~~dividend income period over period. ~~For the three months ended~~

As of December 31, ~~2017, other income consisted primarily~~2020 and September 30, 2020, no single investment represented greater than 10% of ~~prepayment fees received. For~~ the ~~three months ended December 31, 2016, other income consisted primarily of success fees recognized.~~

~~The following tables list the~~total investment ~~income for our five largest~~ portfolio ~~company investments~~ at fair ~~value during the respective periods:~~value.

   As of December 31, 2017 Three Months Ended December 31, 2017
Company
   Fair Value    % of Portfolio Investment Income    % of Total
Income
NetFortris Corp.
   $ 24,795    6.3 % $ 663    6.1 %
IA Tech, LLC
   23,690    6.0 722    6.7
TapRoot Partners, Inc.
   22,220    5.7 649    6.0
Impact! Chemical Technologies, Inc. ^(A)
   20,336    5.2 45    0.4
WadeCo Specialties, Inc.
   20,005    5.1 500    4.6






Subtotal—five largest investments
   111,046    28.3 2,579    23.8
Other portfolio companies
   281,384    71.7 8,268    76.2






Total Investment Portfolio
   $ 392,430    100.0 % $ 10,847    100.0 %






^(A) ~~New investment during applicable period.~~

   As of December 31, 2016 Three Months Ended December 31, 2016
Company
   Fair Value    % of Portfolio Investment Income    % of Total
Income
IA Tech, LLC
   $ 23,345    8.1 % $ 705    7.1 %
WadeCo Specialties, Inc.
   18,443    6.4 477    4.8
United Flexible, Inc.
   18,196    6.3 568    5.7
Lignetics, Inc.
   13,809    4.8 429    4.3
AG Transportation Holdings, LLC
   13,130    4.6 440    4.4






Subtotal—five largest investments
   86,923    30.2 2,619    26.3
Other portfolio companies
   201,323    69.8 7,351    73.7






Total Investment Portfolio
   $ 288,246    100.0 % $ 9,970    100.0 %






Expenses
Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, increased ~~by 10.8%~~$0.9 million, or 15.0%, for the three months ended December 31, ~~2017~~2020 as compared to the prior ~~year.~~year period. This increase was primarily due to a $0.7 million ~~increase~~decrease in fee credits granted by the Adviser.
Total interest expense on borrowings and ~~a $0.2 million increase in our net base management and incentive fees to the Advisor, partially offset by a $0.3 million decrease in dividend expense on mandatorily redeemable preferred stock.~~
~~Interest expense increased by 121.4%~~notes payable was relatively flat during the three months ended December 31, ~~2017,~~2020, as compared to the prior year ~~due to~~period; however, the components of our interest expense shifted, period over period. Interest expense on our notes payable increased by $0.3 million year over year with the issuance of the 2024 Notes in October 2019 and the 2026 Notes in December 2020. Interest expense on our Credit Facility decreased by $0.2 million driven primarily by a decrease in the effective interest rate, partially offset by an increase in the weighted average balance outstanding on our Credit Facility. ~~The weighted average balance outstanding during the three months ended December 31, 2017, was $98.2 million, as compared to $39.3 million in the prior year period, an increase of 149.9%.~~ The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding the impact of deferred financing costs, was ~~5.0%~~3.6% during the three months ended December 31, ~~2017,~~2020, compared to ~~5.7%~~5.4% during the prior year period. The decrease in the effective interest rate was driven primarily by ~~the~~a decrease in ~~unused commitment fees paid in the current year period due~~LIBOR as compared to the ~~greater~~prior year period. The weighted average balance outstanding on our Credit ~~Facility.~~Facility was $105.1 million during the three months ended December 31, 2020, as compared to $88.2 million in the prior year period, an increase of 19.2%.
~~Net~~The net base management fee earned by the Adviser increased by $0.2 million, or ~~12.0%~~13.3%, during the three months ended December 31, ~~2017,~~2020, as compared to the prior year period, resulting from an increase in average total assets subject to the base management fee and a decrease in credits from the Adviser period over period.
The income-based incentive fee decreased slightly for the three months ended December 31, 2020, as compared to the prior year ~~over year.~~
~~Our~~period, due to the increased hurdle rate as compared to the prior year period. The hurdle rate was 2.0% for the three months ended December 31, 2020, as compared to 1.75% for the three months ended December 31, 2019. During the three months ended December 31, 2020 and 2019, our Board of Directors acceptednon-contractual, unconditional and irrevocable credits from the Adviser of $0.2 million and $0.8 million, respectively, to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of our distributions to common ~~stockholders during the three months ended December 31, 2017 and 2016, which credits totaled $0.1 million and $37, respectively.~~stockholders.
43
The base management, loan servicing and incentive fees, and associatednon-contractual, unconditional and irrevocable credits, are computed quarterly, as described under“Transactions with the Adviser” in Note 4—Related Party Transactions of the ~~accompanying~~Notes toConsolidated Financial Statements and are summarized in the following table:

   Three Months Ended
December 31,    Three Months Ended
December 31,
   2017 2016    2020 2019
Average total assets subject to base management fee^(A)
   $ 383,086 $ 315,000    $ 457,600 $ 423,314
Multiplied by prorated annual base management fee of 1.75%
   0.4375 % 0.4375 %    0.4375 % 0.4375 %




Base management fee^(B)
   $ 1,676 $ 1,378    $ 2,002 $ 1,852
Portfolio company fee credit
   (664 ) (649 )    (352 ) (352 )
Senior syndicated loan fee credit
   (92 ) (13 )
Syndicated loan fee credit
   (87 ) (121 )




Net Base Management Fee
   $ 920 $ 716    $ 1,563 $ 1,379




Loan servicing fee^(B)
   1,186 983    1,348 1,403
Credit to base management fee - loan servicing fee^(B)
   (1,186 ) (983 )    (1,348 ) (1,403 )




Net Loan Servicing Fee
   $ —   $ —      $ —   $ —




Incentive fee^(B)
   1,373 1,293    1,367 1,394
Incentive fee credit
   (85 ) (37 )    (211 ) (840 )




Net Incentive Fee
   $ 1,288 $ 1,256    $ 1,156 $ 554




Portfolio company fee credit
   (664 ) (649 )    (352 ) (352 )
Senior syndicated loan fee credit
   (92 ) (13 )
Syndicated loan fee credit
   (87 ) (121 )
Incentive fee credit
   (85 ) (37 )    (211 ) (840 )




Credits to Fees From Adviser - other^(B)
   $ (841 ) $ (699 )    $ (650 ) $ (1,313 )




^(A)
Average total assets subject to the base management fee is defined as total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the applicable quarters within the respective periods and adjusted appropriately for any share issuances or repurchases during the periods.
^(B)
Reflected, on a gross basis, as a line item on our ~~accompanying~~Consolidated Statements of Operations.
Dividend expense on mandatorily redeemable preferred stock decreased by $0.3 million, or 24.6%, due to the redemption of all of our $61.0 million 6.75% Series 2021 Term Preferred Stock and the issuance of $51.8 million 6.00% Series 2024 Term Preferred Stock in September 2017.
Net Realized and Unrealized Gain (Loss)
Net Realized Gain (Loss) on Investments
For the three months ended December 31, 2017, we recorded a net realized gain on investments of $0.6 million, which resulted primarily from the sale of our investment in Flight Fit N Fun LLC in October 2017 for a $0.6 million realized gain.
~~For the three months ended December 31, 2016,~~2020, we recorded a net realized loss on investments of ~~$3.4~~$2.1 million, which resulted primarily from the ~~sale of substantially all the assets of RBC Acquisition Corp (“RBC”) for a $2.3 million realized~~ loss ~~and thewrite-off~~ ~~of $5.0 million of~~recognized on our investment in ~~Sunshine, partially offset by~~Edmentum Ultimate Holdings, LLC.
For the ~~sale~~three months ended December 31, 2019, we recorded a net realized loss on investments of ~~Behrens Manufacturing, LLC (“Behrens”) for a $2.5~~$4.4 million, ~~realized gain and a $1.3 million realized gain related to an additionalearn-out~~which resulted primarily from ~~Funko, LLC, which was exited~~the loss recognized on our investment in ~~the prior year.~~New Trident Holdcorp, Inc.
44
Net Unrealized Appreciation (Depreciation) of Investments
During the three months ended December 31, ~~2017,~~2020, we recorded net unrealized appreciation of investments in the aggregate amount of ~~$1.4~~$8.5 million. The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the three months ended December 31, ~~2017,~~2020, were as follows:

   Three Months Ended December 31, 2017
Portfolio Company
   Realized
Gain
(Loss)    Unrealized
Appreciation
(Depreciation)    Reversal of
Unrealized
(Appreciation)
Depreciation    Net
Gain
(Loss)
Francis Drilling Fluids, Ltd.
   $ —      $ 2,429    $ —      $ 2,429
LWO Acquisitions Company LLC
   —      1,012    —      1,012
Edge Adhesives Holdings, Inc.
   —      482    —      482
NetFortris Corp.
   —      430    —      430
WadeCo Specialties, Inc.
   —      227    —      227
United Flexible, Inc.
   —      186    —      186
Vision Government Solutions, Inc.
   —      178    —      178
Canopy Safety Brands, LLC
   —      147    —      147
TapRoot Partners, Inc.
   —      110    —      110
Alloy Die Casting, Co.
   —      86    —      86
Flight Fit N Fun LLC
   582    —      (725 )    (143 )
Lignetics, Inc.
   —      (206 )    —      (206 )
Defiance Integrated Technologies, Inc.
   —      (212 )    —      (212 )
Targus Cayman HoldCo, Ltd.
   —      (249 )    —      (249 )
Vacation Rental Pros
   —      (252 )    —      (252 )
Meridian Rack & Pinion, Inc.
   —      (303 )    —      (303 )
Sunshine Media Holdings
   —      (318 )    —      (318 )
L Discovery
   —      (555 )    —      (555 )
New Trident Holdcorp, Inc.
   —      (1,221 )    —      (1,221 )
Other, net (<$250)
   (8 )    201    (87 )    106








Total:
   $ 574    $ 2,172    $ (812 )    $ 1,934








   Three Months Ended December 31, 2020
Portfolio Company
   Realized Gain
(Loss)    Unrealized
Appreciation
(Depreciation)    Reversal of
Unrealized
(Appreciation)
Depreciation    Net
Gain (Loss)
AG Transportation Holdings, LLC
   $ —      $ 1,276    $ —      $ 1,276
Triple H Food Processors, LLC
   —      602    —      602
PIC 360, LLC
   —      518    —      518
Antenna Research Associates, Inc.
   —      494    —      494
R2i Holdings, LLC
   —      459    —      459
Edmentum Ultimate Holdings, LLC
   (2,351 )    —      2,770    419
Targus Cayman HoldCo, Ltd.
   —      407    —      407
Café Zupas
   —      324    —      324
Vertellus Holdings LLC
   (41 )    —      313    272
EL Academies, Inc.
   —      259    —      259
Keystone Acquisition Corp.
   —      258    —      258
Tailwind Smith Cooper Intermediate Corporation
   —      256    —      256
DKI Ventures, LLC
   —      249    —      249
Medical Solutions Holdings, Inc.
   —      237    —      237
Magpul Industries Corp.
   —      210    —      210
American Trailer Rental Group LLC
   —      198    —      198
TNCP Intermediate HoldCo, LLC
   —      192    —      192
Gray Matter Systems, LLC
   —      173    —      173
Drive Chassis Holdco, LLC
   —      168    —      168
LWO Acquisitions Company LLC
   —      150    —      150
ENET Holdings, LLC
   —      (374 )    —      (374 )
Imperative Holdings Corporation
   —      (793 )    —      (793 )
Other, net (<$500)
   248    149    —      397








Total:
   $ (2,144 )    $ 5,412    $ 3,083    $ 6,351








The primary driver of net unrealized appreciation of $8.5 million for the three months ended December 31, ~~2017~~2020 was the reversal of previously recorded unrealized depreciation of Edmentum Ultimate Holdings, LLC and the improvement in the financial and operational performance of ~~certain portfolio companies, most notably Francis Drilling Fluids, Ltd. (“FDF”) of $2.4 million and LWO Acquisitions Company~~AG Transportation Holdings, LLC, ~~of $1.0 million. This appreciation was~~ partially offset by the decline in the financial and operational performance of ~~New Trident Holdcorp, Inc.~~certain of ~~$1.2 million.~~our other portfolio companies, including most notably, Imperative Holdings Corporation.
During the three months ended December 31, ~~2016,~~2019, we recorded net unrealized ~~depreciation~~appreciation of investments in the aggregate amount of ~~$1.1~~$0.1 million. The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the three months ended December 31, ~~2016,~~2019, were as follows:

   Three Months Ended December 31, 2016
Portfolio Company
   Realized
Gain
(Loss)    Unrealized
Appreciation
(Depreciation)    Reversal of
Unrealized
(Appreciation)
Depreciation    Net
Gain
(Loss)
Funko, LLC
   $ 1,251    $ 53    $ —      $ 1,304
Edge Adhesives Holdings, Inc.
   —      666    —      666
Meridian Rack & Pinion, Inc.
   —      605    —      605
Mikawaya
   —      276    —      276
New Trident Holdcorp, Inc.
   —      (281 )    —      (281 )
Sunshine Media Holdings
   (5,000 )    983    3,613    (404 )
Vertellus Specialties Inc.
   109    (574 )    —      (465 )
Behrens Manufacturing, LLC
   2,505    —      (3,211 )    (706 )
Defiance Integrated Technologies, Inc.
   —      (710 )    —      (710 )
Lignetics, Inc.
   —      (1,011 )    —      (1,011 )
RBC Acquisition Corp.
   (2,330 )    —      1,119    (1,211 )
Francis Drilling Fluids, Ltd.
   —      (3,797 )    —      (3,797 )
Other, net (<$250)
   17    1,148    66    1,231








Total:
   $ (3,448 )    $ (2,642 )    $ 1,587    $ (4,503 )








   Three Months Ended December 31, 2019
Portfolio Company
   Realized Gain
(Loss)    Unrealized
Appreciation
(Depreciation)    Reversal of
Unrealized
(Appreciation)
Depreciation    Net
Gain (Loss)
The Mochi Ice Cream Company
   $ —      $ 1,541    $ —      $ 1,541
NetFortris Corp.
   —      704    —      704
Vacation Rental Pros Property Management, LLC
   —      319    —      319
New Trident Holdcorp, Inc.
   (4,409 )    —      4,409    —
Drive Chassis Holdco, LLC
   —      (156 )    —      (156 )
Precision International, LLC
   —      (248 )    —      (248 )
B+T Group Acquisition Inc.
   —      (264 )    —      (264 )
Sea Link International IRB, Inc.
   —      (317 )    —      (317 )
ENET Holdings, LLC
   —      (362 )    —      (362 )
DKI Ventures, LLC
   —      (430 )    —      (430 )
R2i Holdings, LLC
   —      (442 )    —      (442 )
Triple H Food Processors, LLC
   —      (464 )    —      (464 )
FES Resources Holdings LLC
   —      (635 )    —      (635 )
Targus Cayman HoldCo, Ltd.
   —      (671 )    —      (671 )
Defiance Integrated Technologies, Inc.
   —      (2,724 )    —      (2,724 )
Other, net (<$500)
   (25 )    (19 )    (102 )    (146 )








Total:
   $ (4,434 )    $ (4,168 )    $ 4,307    $ (4,295 )








The primary driver of net unrealized ~~depreciation~~appreciation of $0.1 million for the three months ended December 31, ~~2016~~2019 was athe reversal of previously recorded unrealized depreciation of New Trident Holdcorp, Inc. and the improvement in the financial and operational performance of The Mochi Ice Cream Company, partially offset by the decline in the financial and operational performance of certain of our other portfolio companies, including most notably, ~~FDF~~Defiance Integrated Technologies, Inc.
Net Realized Loss on Other
We incurred a loss on extinguishment of ~~$3.8~~debt of $1.4 million ~~Lignetics, Inc. of $1.0 million,~~during the ~~reversal of previously recorded depreciation on our investment in Sunshine upon partial~~three months ended December 31, 2019, which resulted from the write-off ~~and~~of unamortized deferred issuance costs at the ~~reversal~~time of ~~previously~~redemption of our Series 2024 Term Preferred Stock in October 2019. No such amounts were recorded ~~unrealized appreciation on our investment in Behrens upon exit. This depreciation was partially offset by~~during the ~~reversal of previously recorded unrealized depreciation on RBC upon exit and an additionalearn-out~~ ~~receivable earned and included in the realized gain on the sale of Funko, LLC.~~three months ended December 31, 2020.
45
Net Unrealized (Appreciation) Depreciation of Other
During the three months ended December 31, ~~2017,~~2020, we recorded ~~$0.2~~$0.3 million of unrealized appreciation onrelated to a change in the fair value of our Credit ~~Facility at fair value.~~Facility. During the three months ended December 31, ~~2016,~~2019, we recorded ~~$0.2 million~~$17 thousand of unrealized ~~depreciation on~~appreciation related to a change in the fair value of our Credit ~~Facility at fair value.~~Facility.
46
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
Our cash flows from operating activities are primarily generated from the interest payments on debt securities that we receive from our portfolio companies, as well as net proceeds received through repayments or sales of our investments. We utilize this cash primarily to fund new investments, make interest payments on our Credit Facility, make distributions to our stockholders, pay management and administrative fees to the Adviser and Administrator, and for other operating expenses.
Net cash ~~used in~~provided by operating activities for the three months ended December 31, ~~2017~~2020 was ~~$36.9~~$12.2 million, as compared to net cash ~~provided by~~used in operating activities of ~~$31.5~~$24.3 million for the three months ended December 31, ~~2016.~~2019. The change was primarily due to ~~an increase~~a decrease in purchases of investments and ~~a decrease~~an increase in principal repayments, ~~on investments and~~partially offset by an increase in net ~~proceeds from sale~~realized appreciation of investments period over period. Purchases of investments were ~~$56.9~~$29.1 million during the three months ended December 31, ~~2017~~2020, compared to ~~$19.8~~$42.5 million during the three months ended December 31, ~~2016.~~2019. Repayments and net proceeds from sales were ~~$19.8~~$34.1 million during the three months ended December 31, ~~2017~~2020, compared to ~~$50.5~~$12.6 million during the three months ended December 31, ~~2016.~~2019.
As of December 31, ~~2017,~~2020, we had loans to, syndicated participations in or equity investments in ~~51 private~~47 companies, with an aggregate cost basis of approximately ~~$450.1~~$488.1 million. As of ~~December 31, 2016,~~September 30, 2020, we had loans to, syndicated participations in or equity investments in ~~44 private~~48 companies, with an aggregate cost basis of approximately ~~$349.0~~$494.6 million.
The following table summarizes our total portfolio investment activity during the three months ended December 31, ~~2017~~2020 and ~~2016:~~2019:

   Three Months Ended
December 31,    Three Months Ended
December 31,
   2017    2016    2020    2019
Beginning investment portfolio, at fair value
   $ 352,373    $ 322,114    $ 450,400    $ 402,875
New investments
   56,336    17,240    29,000    38,000
Disbursements to existing portfolio companies
   602    2,807    98    4,535
Scheduled principal repayments on investments
   (2,529 )    (1,683 )    (619 )    (1,963 )
Unscheduled principal repayments on investments
   (16,040 )    (40,551 )    (30,012 )    (10,693 )
Net proceeds from sale of investments
   (1,274 )    (8,219 )    (3,511 )    25
Net unrealized appreciation (depreciation) of investments
   2,172    (2,642 )    5,412    (4,168 )
Reversal of prior period (appreciation) depreciation of investments on realization
   (812 )    1,587
Net realized gain (loss) on investments or other
   574    (3,448 )
Reversal of prior period depreciation (appreciation) of investments on realization
   3,083    4,307
Net realized gain (loss) on investments
   (2,144 )    (4,434 )
Increase in investments due to PIK^(A)
   983    1,095    654    328
Net change in premiums, discounts and amortization
   45    (54 )    (2 )    196








Investment Portfolio, at Fair Value
   $ 392,430    $ 288,246    $ 452,359    $ 429,008








^(A) ~~Paid-in-kind~~ ~~(“PIK”)~~
PIK interest is anon-cash source of income and is calculated at the contractual rate stated in a loan agreement and added to the principal balance of a loan.
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, ~~2017:~~2020:

      Amount^(A) Amount
For the remaining nine months ending September 30:
   2018    $ 33,643
2021
$ 48,332
For the fiscal years ending March 31:
   2019    53,920
For the fiscal years ending September 30:

2022
88,085
   2020    82,103
2023
48,440
   2021    81,813
2024
44,834
   2022    45,022
2025
132,500
   Thereafter    117,154
Thereafter
87,407



Total contractual repayments
   $ 413,655
Total contractual repayments
$ 449,598
   Adjustments to cost basis of debt investments    (5,750 ) Adjustments to cost basis of debt investments (711 )
   Investments in equity securities    42,227 Investments in equity securities 39,224



Investments held as of December 31, 2017 at Cost:
   $ 450,132
Investments held as of December 31, 2020 at cost:
$ 488,111


Financing Activities
Net cash used in financing activities for the three months ended December 31, 2020 was $13.1 million, which consisted primarily of $111.7 million in net repayments on our Credit Facility, partially offset by $100.0 million in gross proceeds from the issuance of long term debt.
Net cash provided by financing activities for the three months ended December 31, ~~2017~~2019 was ~~$36.4~~$10.4 million, which consisted primarily of ~~$37.5~~$38.8 million in gross proceeds from the issuance of long term debt and $23.9 million in net borrowings on our Credit Facility, partially offset by $51.8 million used in the redemption of our Series 2024 Term Preferred Stock and ~~$5.6~~$6.4 million in distributions to common ~~stockholders, partially offset by $4.5 million in proceeds from the issuance of common stock, net of underwriting costs.~~stockholders.
Net cash used in financing activities for the three months ended December 31, 2016 was $31.8 million, which consisted primarily of $43.1 million in net repayments on our Credit Facility and $5.2 million in distributions to common stockholders, partially offset by $16.4 million in proceeds from the issuance of common stock, net of underwriting costs.
47
Distributions ~~and Dividends~~ to Stockholders
Common Stock Distributions
To qualify to be taxed as a RIC and thus avoid corporate level federal income tax on the income we distribute to our stockholders, we are required to distribute to our stockholders on an annual basis at least 90.0% of our ~~investment company taxable income.~~Investment Company Taxable Income. Additionally, our Credit Facility has a covenant that generally restricts the amount of distributions to stockholders that we can pay out to be no greater than our aggregate net investment income, net capital gains and amounts elected to have been paid during the prior year in accordance with Section 855(a) of the Code. In accordance with these requirements, we paid monthly cash distributions of $0.065 and $0.07 per common share for each month ~~during~~for the three months ended December 31, ~~2017~~2020 and ~~2016, which~~2019, respectively. These distributions totaled an aggregate of ~~$5.6~~$6.3 million and ~~$5.2~~$6.4 million for the three months ended December 31, 2020 and 2019, respectively. In January ~~2018,~~2021, our Board of Directors declared a monthly distribution of ~~$0.07~~$0.065 per common share for each of January, February, and March ~~2018.~~2021. Our Board of Directors declared these distributions to our stockholders based on our estimates of our ~~investment company taxable income~~Investment Company Taxable Income for the fiscal year ending September 30, ~~2018.~~2021. From inception through December 31, 2020, we have paid 215 monthly or quarterly consecutive distributions to common stockholders totaling approximately $376.6 million or $20.45 per share.
For the fiscal year ended September 30, ~~2017, our current and accumulated earnings and profits (after taking into account mandatorily redeemable preferred stock dividends) exceeded~~2020, distributions declared and paid ~~and, in accordance with Section 855(a) of the Code, we elected to treat $0.3 million of the first~~exceeded taxable income available for common distributions ~~paid~~resulting in ~~fiscal year 2017 as having been paid in the respective prior year.~~a partial return of capital of approximately $0.4 million.
The characterization of the common stockholder distributions declared and paid for the fiscal year ending September 30, ~~2018~~2021 will be determined at fiscal~~year-end~~ year end, based upon our investment company taxable income for the full fiscal year and distributions paid during the full fiscal year. Such a characterization made on a quarterly basis may not be representative of the actual full fiscal year characterization.
~~Preferred Stock Dividends~~Dividend Reinvestment Plan
~~In October 2017,~~Our common stockholders who hold their shares through our ~~Board~~transfer agent, Computershare, Inc. (“Computershare”), have the option to participate in a dividend reinvestment plan offered by Computershare, as the plan agent. This is an “opt in” dividend reinvestment plan, meaning that common stockholders may elect to have their cash distributions automatically reinvested in additional shares of ~~Directors declared a combined dividend for~~our common stock. Common stockholders who do make such election will receive their distributions in cash. Common stockholders who receive distributions in the~~pro-rated~~ ~~period from and including the issuance date, September 27, 2017, to and including September 30, 2017 and the full month~~ form of ~~October 2017, which totaled $0.141667 per share,~~stock will be subject to the ~~holders of our Series 2024 Term Preferred Stock~~same federal, state and ~~monthly cash dividends of $0.125 per share~~local tax consequences as stockholders who elect to ~~holders of our Series 2024 Term Preferred Stock for each of November and December 2017. These~~receive their distributions ~~totaled~~in cash. The common stockholder will have an ~~aggregate of $0.8 million. Our Board of Directors declared and we paid monthly cash dividends of $0.140625 per share to holders of our Series 2021 Term Preferred Stock for each month during~~adjusted basis in the three months ended December 31, 2016, which totaled an aggregate of $1.0 million. In January 2018, our Board of Directors declared monthly cash dividends of $0.125 per share to holders of our Series 2024 Term Preferred Stock for each of January, February, and March 2018.
~~In accordance with GAAP, we treat these monthly dividends as an operating expense. For federal income tax purposes,~~additional common shares purchased through the ~~dividends paid by us to preferred stockholders generally constitute ordinary income~~plan equal to the ~~extent~~amount of ~~our current and accumulated earnings and profits.~~the reinvested distribution. The additional shares will have a new holding period commencing on the day following the date on which the shares are credited to the common stockholder’s account. Computershare purchases shares in the open market in connection with the obligations under the plan.
Equity
Registration Statement
~~We filed Post-Effective Amendment No. 2 to our current universal~~Our shelf registration statement ~~on FormN-2~~ ~~(our “Registration Statement”) (FileNo. 333-208637)~~ ~~with the SEC on December 19, 2017, which was declared effective by the SEC on February 1, 2018. Our Registration Statement~~ permits us to issue, through one or more transactions, up to an aggregate of $300.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities and warrants to purchase common stock, preferred stock or debt securities. As of December 31, ~~2017,~~2020, we ~~have~~had the ability to issue up to ~~$220.0~~an additional $124.8 million in securities under the ~~Registration Statement.~~registration statement.
Common Stock
In February ~~2015,~~2019, we entered into an equity distribution ~~agreements (commonly referred to as“at-the-market~~ ~~agreements” or the “Sales Agreements”)~~agreement with ~~KeyBanc Capital Markets Inc. and Cantor Fitzgerald & Co., each a “Sales Agent,”~~Jefferies LLC (the “Jefferies Sales Agreement”) under which we ~~had~~have the ability to issue and sell, from time to time, ~~through the Sales Agents,~~ up to an aggregate offering price of $50.0 million shares of our common stock. In May 2017, we terminated the Sales Agreement with KeyBanc Capital Markets Inc. and amended the Sales Agreement with Cantor Fitzgerald & Co. to reference our current registration statement. All other material terms of the Sales Agreement remained unchanged. During the three months ended December 31, ~~2017,~~2020, we sold ~~471,498~~923,542 shares of our common stock under the Jefferies Sales Agreement, ~~with Cantor Fitzgerald & Co.,~~ at a weighted-average price of ~~$9.69~~$8.11 per share and raised ~~$4.6~~$7.5 million of gross proceeds. Net proceeds, after deducting commissions and offering costs borne by us, were approximately ~~$4.5~~$7.4 million. As of December 31, ~~2017,~~2020, we had a remaining capacity to sell up to ~~$37.9~~an additional $13.6 million of our common stock under the Jefferies Sales ~~Agreement with Cantor Fitzgerald & Co. We did not sell any shares under the Sales Agreements during the three months ended December 31, 2016.~~Agreement.
48
Pursuant to our prior registration statement, in October 2016, we completed a public offering of 2.0 million shares of our common stock at a public offering price of $7.98 per share, which was below our then current NAV per share. In November 2016, the underwriters partially exercised their overallotment option to purchase an additional 173,444 shares of our common stock. Gross proceeds totaled $17.3 million and net proceeds, after deducting underwriting discounts and offering costs borne by us, were approximately $16.4 million. The net proceeds of this offering were used to repay borrowings under our Credit Facility.
We anticipate issuing equity securities to obtain additional capital in the future. However, we cannot determine the timing or terms of any future equity issuances or whether we will be able to issue equity on terms favorable to us, or at all. To the extent that our common stock trades at a market price below our NAV per share, we will generally be precluded from raising equity capital through public offerings of our common stock, other than pursuant to stockholder and independent director approval or a rights offering to existing common stockholders. We did not request that our stockholders approve the Company’s ability to issue shares of common stock at a price below NAV at our annual meeting of stockholders held on February 9, 2017. We are not requesting that our stockholders approve the Company’s ability to issue shares of common stock at a price below NAV at the Company’s 2018 Annual Meeting of Stockholders to be held on February 8, 2018.
On ~~February 2, 2018,~~December 31, 2020, the closing market price of our common stock was ~~$9.09~~$8.86 per share, a ~~7.2%~~16.4% premium to our December 31, ~~2017~~2020 NAV per share of ~~$8.48.~~
~~Term Preferred Stock~~
Pursuant to our Registration Statement, in September 2017, we completed a public offering of approximately 2.1 million shares of our Series 2024 Term Preferred Stock at a public offering price of $25.00 per share. Gross proceeds totaled $51.8 million and net proceeds, after deducting underwriting discounts, commissions and offering expenses borne by us, were approximately $49.8 million. We incurred approximately $1.9 million in total underwriting discounts and offering costs related to the issuance of the Series 2024 Term Preferred Stock, which have been recorded as discounts to the liquidation value on our accompanying~~Consolidated Statements of Assets and Liabilities~~ and are being amortized over the period from issuance through September 30, 2024, the mandatory redemption date. The proceeds plus borrowings under our Credit Facility were used to voluntarily redeem all 2.4 million outstanding shares of our then existing 6.75% Series 2021 Term Preferred Stock, par value $0.001 per share. In connection with the voluntary redemption of our Series 2021 Term Preferred Stock, we incurred a loss on extinguishment of debt of $1.3 million, which has been reflected in Realized loss on other in our accompanying ~~Consolidated Statement of Operations~~ ~~and which is primarily comprised of the unamortized deferred issuance costs at the time of redemption.~~
The shares of our Series 2024 Term Preferred Stock are traded under the ticker symbol “GLADN” on the Nasdaq. Our Series 2024 Term Preferred Stock is not convertible into our common stock or any other security and provides for a fixed dividend equal to 6.00% per year, payable monthly (which equates in total to approximately $3.1 million per year). We are required to redeem all of the outstanding Series 2024 Term Preferred Stock on September 30, 2024 for cash at a redemption price equal to $25.00 per share plus an amount equal to all unpaid dividends and distributions on such share accumulated to (but excluding) the date of redemption (the “Redemption Price”). We may additionally be required to mandatorily redeem some or all of the shares of our Series 2024 Term Preferred Stock early, at the Redemption Price, in the event of the following: (1) upon the occurrence of certain events that would constitute a change in control, and (2) if we fail to maintain an asset coverage of at least 200% on our “senior securities that are stock” (which is currently only our Series 2024 Term Preferred Stock) and the failure remains for a period of 30 days following the filing date of our next SEC quarterly or annual report. The asset coverage on our “senior securities that are stock” as of September 30, 2017 was 249.6%, calculated in accordance with Sections 18 and 61 of the 1940 Act.
We may also voluntarily redeem all or a portion of the Series 2024 Term Preferred Stock at our option at the Redemption Price at any time after September 30, 2019. If we fail to redeem our Series 2024 Term Preferred Stock pursuant to the mandatory redemption required on September 30, 2024, or in any other circumstance in which we are required to mandatorily redeem our Series 2024 Term Preferred Stock, then the fixed dividend rate will increase by 4.0% for so long as such failure continues. As of December 31, 2017, we have not redeemed, nor have we been required to redeem, any shares of our outstanding Series 2024 Term Preferred Stock.$7.61.
Revolving Credit Facility
On ~~May 1, 2015,~~December 9, 2020, we, through Business Loan, entered into ~~a Fifth Amended and Restated~~Amendment No. 8 to our Credit ~~Agreement~~Facility with KeyBank, ~~as administrative agent, lead arranger and a lender,~~ which increased the commitment amount offrom $180 million to $205 million. All principal and interest will continue to be due and payable on April 15, 2022.
On November 2, 2020, we, through Business Loan, entered into Amendment No. 7 to our Credit Facility with KeyBank, which provided consent for relevant amendments to our credit agreements with certain of our portfolio companies.
On April 29, 2020, we, through Business Loan, entered into Amendment No. 6 to our Credit Facility with KeyBank, which extended the revolving period end date by approximately six months to July 15, 2021, included certain LIBOR transition considerations and decreased the commitment amount from ~~$137.0~~$190 million to ~~$140.0~~$180 million.
On July 10, 2019, we, through Business Loan, entered into Amendment No. 5 to our Credit Facility with KeyBank, which (i) modified the covenants to reduce our minimum asset coverage with respect to senior securities representing indebtedness from 200% to 150% (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act), (ii) amended the excess concentration limits definition to decrease the limit for non-first lien loans from 60% to 50% under certain circumstances and (iii) amended the distributions covenant to allow a distribution to be applied towards the redemption of our Series 2024 Term Preferred Stock.
On March 9, 2018, we, through Business Loan, entered into Amendment No. 4 to our Credit Facility with KeyBank, which increased the commitment amount from $170.0 million to $190.0 million, extended the revolving period end date by ~~three~~approximately two years to January ~~19, 2019,~~15, 2021, decreased the marginal interest rate added to30-day LIBOR from ~~3.75%~~3.25% to ~~3.25%~~2.85% per annum, ~~set~~and changed the unused commitment fee atfrom 0.50% ~~on all undrawn amounts, expanded~~of the ~~scope of eligible collateral,~~total unused commitment amount to 0.50% when the average unused commitment amount for the reporting period is less than or equal to 50%, 0.75% when the average unused commitment amount for the reporting period is greater than 50% but less than or equal to 65%, and ~~amended other terms and conditions to among other items. If our Credit Facility~~1.00% when the average unused commitment amount for the reporting period is ~~not renewed or extended by January 19, 2019, all principal and interest will be due and payable on or before April 19, 2020.~~greater than 65%. Subject to certain terms and conditions, our Credit Facility may be expanded up to a total of ~~$250.0~~$265.0 million through additional commitments of new or existing lenders. We incurred fees of approximately ~~$1.1~~$1.2 million in connection with this amendment, which are being amortized through our Credit Facility’s revolving period end date of January 19, 2019. On June 19, 2015, we, through Business Loan, entered into certain joinder and assignment agreements with three new lenders to increase borrowing capacity on our Credit Facility by $30.0 million to $170.0 million. We incurred fees of approximately $0.6 million in connection with this expansion, which are being amortized through our Credit Facility’s revolving period end date of January 19, 2019.
49
On October 9, 2015, August 18, 2016, and August 24, 2017, we entered into Amendments No. 1, 2 and 3 to our Credit Facility, respectively, each of which clarified or modified various constraints on available borrowings.July 15, 2021.
Interest is payable monthly during the term of our Credit Facility. Available borrowings are subject to various constraints imposed under our Credit Facility, based on the aggregate loan balance pledged by Business Loan, which varies as loans are added and repaid, regardless of whether such repayments are prepayments or made as contractually required. Our Credit Facility also requires that any interest or principal payments on pledged loans be remitted directly by the borrower into a lockbox account with KeyBank and with The Bank of New York Mellon Trust Company, N.A. as custodian. KeyBank, which also serves as the trustee of the account, generally remits the collected funds to us once a month.
Our Credit Facility contains covenants that require Business Loan to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions), and restrict material changes to our credit and collection policies without the lenders’ consents. Our Credit Facility generally limits distributions to our stockholders on a fiscal year basis to the sum of our net investment income, net capital gains and amounts elected to have been paid during the prior year in accordance with Section 855(a) of the Code. Business Loan is also subject to certain limitations on the type of loan investments it can apply as collateral towards the borrowing base to receive additional borrowing availability under our Credit Facility, including restrictions on geographic concentrations, sector concentrations, loan size, payment frequency and status, average life, portfolio company leverage and lien property. Our Credit Facility further requires Business Loan to comply with other financial and operational covenants, which obligate Business Loan to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of 25 obligors required in the borrowing base.
Additionally, we are ~~subject to a performance guaranty that requires us~~required to maintain (i) a minimum net worth (defined in our Credit Facility to include ~~our~~any outstanding mandatorily redeemable preferred stock) of $205.0 million plus 50% of all equity and subordinated debt raised after May 1, 2015 less 50% of any equity and subordinated debt retired or redeemed after May 1, 2015, which equates to ~~$224.1~~$323.2 million as of December 31, ~~2017,~~2020, (ii) asset coverage with respect to “senior securities representing indebtedness” of at least ~~200%,~~150% (or such percentage as may be set forth in ~~accordance with Sections~~Section 18 ~~and~~of the 1940 Act, as modified by Section 61 of the 1940 ~~Act~~Act), and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code.
As of December 31, ~~2017,~~2020, and as defined in ~~the performance guaranty of~~ our Credit Facility, we had a net worth of ~~$274.9~~$438.5 million, asset coverage on our “senior securities representing indebtedness” of ~~310.4%~~213.2% and an active status as a BDC and RIC. In addition, we had 3532 obligors in our Credit Facility’s borrowing base as of December 31, ~~2017.~~2020. As of December 31, ~~2017,~~2020, we were in compliance with all of our Credit Facility covenants. Refer to Note 5—Borrowings of the notes to our ~~accompanying~~Consolidated Financial Statementsincluded elsewhere in this ~~quarterly report~~Quarterly Report for additional information regarding our Credit Facility.
Notes Payable
In December 2020, we completed a debt offering of $100.0 million aggregate principal amount of the 2026 Notes for net proceeds of approximately $97.7 million, after deducting underwriting discounts, commissions and offering expenses borne by us. The 2026 Notes will mature on January 31, 2026 and may be redeemed in whole or in part at any time or from time to time at the Company’s option prior to maturity at par plus a “make-whole” premium, if applicable. The 2026 Notes bear interest at a rate of 5.125% per year. Interest is payable semi-annually on January 31 and July 31 of each year (which equates to approximately $5.1 million per year) beginning July 31, 2021.
In October 2019, we completed a public debt offering of $38.8 million aggregate principal amount of 5.375% Notes due 2024 (the “2024 Notes”), inclusive of the overallotment option exercised by the underwriters, for net proceeds of approximately $37.5 million after deducting underwriting discounts, commissions and offering expenses borne by us. The 2024 Notes are traded under the ticker symbol “GLADL” on the Nasdaq Global Select Market (“Nasdaq”). The 2024 Notes will mature on November 1, 2024 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after November 1, 2021. The 2024 Notes bear interest at a rate of 5.375% per year, payable quarterly on February 1, May 1, August 1, and November 1 of each year (which equates to approximately $2.1 million per year).
In November 2018, we completed a public debt offering of $57.5 million aggregate principal amount of 6.125% Notes due 2023 (the “2023 Notes”), inclusive of the overallotment option exercised by the underwriters, for net proceeds of $55.4 million after deducting underwriting discounts, commissions and offering expenses borne by us. As of December 31, 2020, the 2023 Notes were traded under the ticker symbol GLADD on Nasdaq. On January 7, 2021, we voluntarily redeemed the 2023 Notes with an aggregate principal amount outstanding of $57.5 million. The net redemption amount was $58.1 million, inclusive of accrued interest through the date of redemption. The notes would have otherwise matured on November 1, 2023.
The indenture relating to the 2026 Notes, 2024 Notes, and 2023 Notes contains certain covenants, including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s asset coverage meets the threshold specified in the 1940 Act after such borrowing, (ii) an inability to declare any dividend or distribution (except a dividend payable in our stock) on a class of our capital stock or to purchase shares of our capital stock unless the Company’s asset coverage meets the threshold specified in the 1940 Act at the time of (and giving effect to) such declaration or purchase, and (iii) if, at any time, we are not subject to the reporting requirements of the Exchange Act, we will provide the holders of the 2026 Notes, 2024 Notes and 2023 Notes, as applicable, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.
The 2026 Notes, 2024 Notes, and 2023 Notes are recorded at the principal amount, less discounts and offering costs, on our Consolidated Statements of Assets and Liabilities.
Off-Balance Sheet Arrangements
We generally recognize success fee income when the payment has been received. As of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, we hadoff-balance sheet success fee receivables on our accruing debt investments of ~~$5.6~~$11.0 million and ~~$4.6~~$9.9 million (or approximately ~~$0.21~~$0.34 per common share and ~~$0.18~~$0.31 per common share), respectively, that would be owed to us, ~~based on our current~~generally upon a change of control of the portfolio ~~if fully paid off.~~companies. Consistent with GAAP, we generally have not recognized our success fee receivables and related income in ourConsolidated Financial Statements until earned. Due to the contingent nature of our success fees, there are no guarantees that we will be able to collect all of these success fees or know the timing of such collections.
50
Contractual Obligations
We have lines of credit, delayed draw term loans, and an uncalled capital commitment with certain of our portfolio companies that have not been fully drawn. Since these commitments have expiration dates and we expect many will never be fully drawn, the total commitment amounts do not necessarily represent future cash requirements. We estimate the fair value of the combined unused lines of credit, the unused delayed draw term loans, and the uncalled capital commitment as of December 31, ~~2017~~2020 and September 30, ~~2017~~2020 to be immaterial.
The following table shows our contractual obligations as of December 31, ~~2017,~~2020, at cost:

   Payments Due by Period    Payments Due by Period
Contractual Obligations^(A)
   Less than
1 Year    1-3 Years    3-5 Years    More than 5
Years    Total    Less than
1 Year    1-3 Years    3-5 Years    More than 5
Years    Total
Credit Facility^(B)
   $ —      $ 130,500    $ —      $ —      $ 130,500    $ —      $ 16,300    $ —      $ —      $ 16,300
Mandatorily Redeemable Preferred Stock
   —      —      —      51,750    51,750
Notes Payable
   —      57,500    38,813    100,000    196,313
Interest expense on debt obligations^(C)
   7,258    11,506    6,210    3,105    28,079    13,146    24,080    12,804    427    50,457




















Total
   $ 7,258    $ 142,006    $ 6,210    $ 54,855    $ 210,329    $ 13,146    $ 97,880    $ 51,617    $ 100,427    $ 263,070




















^(A)
Excludes our unused line of credit commitments, an unused delayed draw term ~~loan~~loans, and uncalled capital commitments to our portfolio companies in an aggregate amount of ~~$24.3~~$33.8 million, at cost, as of December 31, ~~2017.~~2020.
^(B)
Principal balance of borrowings outstanding under our Credit Facility, based on the maturity date following the current contractual revolver period end ~~date to the revolving nature of the facility.~~date.
^(C)
Includes estimated interest payments on our Credit Facility, 2026 Notes, 2024 Notes, and ~~dividend obligations on our Series 2024 Term Preferred Stock.~~2023 Notes. The amount of interest expense calculated for purposes of this table was based upon rates and balances as of December 31, ~~2017. Dividend payments on our Series 2024 Term Preferred Stock assume quarterly dividend declarations and monthly dividend distributions through the date of mandatory redemption.~~2020.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported consolidated amounts of assets and liabilities, including disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ materially from those estimates under different assumptions or conditions. We have identified our investment valuation policy (which has been approved by our Board of Directors) as our most critical accounting policy, which is described in Note 2— Summary of Significant Accounting Policies in the accompanying~~Notes~~ notes to our Consolidated Financial Statements included elsewhere in this Quarterly Report. Additionally, refer to Note 3—Investments in ~~the~~our accompanyingNotes toConsolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding fair value measurements and our application of Financial Accounting Standards Board Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures.” We have also identified our revenue recognition policy as a critical accounting policy, which is described in Note 2— Summary of Significant Accounting Policies in ~~the~~our accompanyingNotes to Consolidated Financial Statements included elsewhere in this Quarterly Report.
Investment Valuation
Credit Monitoring and Risk Rating
The Adviser monitors a wide variety of key credit statistics that provide information regarding our portfolio companies to help us assess credit quality and portfolio performance and, in some instances, used as inputs in our valuation techniques. Generally, we, through the Adviser, participate in periodic board meetings of our portfolio companies in which we hold board seats and also require them to provide annual audited and monthly unaudited financial statements. Using these statements or comparable information and board discussions, the Adviser calculates and evaluates certain credit statistics.
The Adviser risk rates all of our investments in debt securities. The Adviser does not risk rate our equity securities. For syndicated loans that have been rated by an SEC registered Nationally Recognized Statistical Rating Organization (“NRSRO”), the Adviser generally uses the average of two corporate level NRSRO’s risk ratings for such security. For all other debt securities, the Adviser uses a proprietary risk rating system. While the Adviser seeks to mirror the NRSRO systems, we cannot provide any assurance that the Adviser’s risk rating system will provide the same risk rating as an NRSRO would for these securities. The Adviser’s risk rating system is used to estimate the probability of default on debt securities and the expected loss if there is a default. The Adviser’s risk rating system uses a scale of 0 to >10, with >10 being the lowest probability of default. It is the Adviser’s understanding that most debt securities ofmedium-sized companies do not exceed the grade of BBB on an NRSRO scale, so there would be no debt securities in the middle market that would meet the definition of AAA, AA or A. Therefore, the Adviser’s scale begins with the designation >10 as the best risk rating which may be equivalent to a BBB from an NRSRO; however, no assurance can be given that a >10 on the Adviser’s scale is equal to a BBB or Baa2 on an NRSRO scale. The Adviser’s risk rating system covers both qualitative and quantitative aspects of the business and the securities we hold.
51
The following table reflects risk ratings for all proprietary loans in our portfolio atas of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, representing approximately ~~91.6%~~93.8% and ~~91.9%~~92.7%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:


As of
December 31,

As of
September 30,

Rating
   2017    2017    As of
December 31,
2020    As of
September 30,
2020
Highest
   9.0    9.0    10.0    10.0
Average
   5.8    5.7    6.4    6.3
Weighted Average
   6.0    5.8    6.7    6.5
Lowest
   1.0    1.0    1.0    1.0
The following table reflects the risk ratings for all syndicated loans in our portfolio that were rated by an NRSRO atas of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, representing approximately ~~7.3%~~5.5% and ~~6.9%~~5.4%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:


As of
December 31,

As of
September 30,

Rating
   2017    2017    As of
December 31,
2020    As of
September 30,
2020
Highest
   6.0    6.0    5.0    5.0
Average
   3.8    4.4    4.6    4.7
Weighted Average
   4.2    4.6    4.6    4.7
Lowest
   1.0    3.0    3.0    3.0
The following table reflects the risk ratings for all syndicated loans in our portfolio that were not rated by an NRSRO atas of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, representing approximately ~~1.1%~~0.7% and ~~1.2%~~1.9%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:


As of
December 31,

As of
September 30,

As of
December 31,

As of
September 30,

Rating
   2017    2017    2020    2020
Highest
   3.0    3.0    5.0    6.0
Average
   2.5    3.0    5.0    5.0
Weighted Average
   2.3    3.0    5.0    4.6
Lowest
   2.0    3.0    5.0    4.0
Tax Status
We intend to continue to maintain our qualification as a RIC under Subchapter M of the Code for federal income tax ~~purposes~~purposes. As a RIC, we generally are not subject to federal income tax on the portion of our taxable income and ~~also~~gains distributed to ~~limit~~our stockholders. To maintain our qualification as a RIC, we must maintain our status as a BDC and meet certainsource-of-income and asset diversification requirements. In addition, in order to qualify to be taxed as a RIC, we must distribute to stockholders at least 90% of our Investment Company Taxable Income, determined without regard to the dividends paid deduction. Our policy generally is to make distributions to our stockholders in an amount up to 100% of our Investment Company Taxable Income. We may retain some or all of our net long-term capital gains, if any, and designate them as deemed distributions, or distribute such gains to stockholders in cash.
To avoid a 4% federal excise ~~taxes~~tax on undistributed amounts of income, we must distribute to stockholders, during each calendar year, an amount at least equal to the sum of: (1) 98% of our ordinary income for the calendar year, (2) 98.2% of our capital gain net income (both long-term and short-term) for the one-year period ending on October 31 of the calendar year, and (3) any income realized, but not distributed, in the preceding year (to the extent that income tax was not imposed on ~~RICs. Refer~~such amounts) less certain over-distributions in prior years. Under the RIC Modernization Act, we are permitted to ~~Note 9—~~~~Distributions to Common Stockholders~~ ~~in the notes to our accompanying~~~~Consolidated Financial Statements~~ ~~included elsewhere in this report~~carryforward any capital losses that we may incur for ~~additional information regarding our tax status.~~an unlimited period, and such capital loss carryforwards will retain their character as either short-term or long-term capital losses.
Recent Accounting Pronouncements
Refer to Note 2—Summary of Significant Accounting Policies in the notes to our accompanyingConsolidated Financial Statements included elsewhere in this ~~report~~Quarterly Report for a description ~~and our application~~ of recent accounting pronouncements.
52
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. The prices of securities held by us may decline in response to certain events, including those directly involving the companies whose securities are owned by us; conditions affecting the general ~~economy;~~economy, including public health emergencies, such as COVID-19; overall market changes; local, regional or global political, social or economic instability; and interest rate fluctuations.
The primary risk we believe we are exposed to is interest rate risk. Because we borrow money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. We use a combination of debt and equity capital to finance our investing activities. We may use interest rate risk management techniques from time to time to limit our exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.
All of our variable-rate debt investments have rates generally associated with either the current LIBOR or prime rate. As of December 31, ~~2017,~~2020, our portfolio of debt investments on a principal basis consisted of the following:

Variable rates
   ~~90.6~~79.6 %
Fixed rates
   ~~9.4~~20.4

Total:
   100.0 %

There have been no material changes in the quantitative and qualitative market risk disclosures for the three months ended December 31, ~~2017~~2020 from that disclosed in our Annual Report.

ITEM 4.
CONTROLS AND PROCEDURES
a) Evaluation of Disclosure Controls and Procedures
As of December 31, ~~2017~~2020 (the end of the period covered by this report), our management, including our chief executive officer and chief financial officer, evaluated the effectiveness and design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective at a reasonable assurance level in timely alerting management, including the chief executive officer and chief financial officer, of material information about us required to be included in periodic SEC filings. However, in evaluation of the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
b) Changes in Internal Control over Financial Reporting
There were no changes in internal controls for the three months ended December 31, ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
53
PART II–OTHER INFORMATION

ITEM 1.
LEGAL PROCEEDINGS.
From time to time, we may become involved in various investigation, claims and legal proceedings that arise in the ordinary course of our business. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While we do not expect that the resolution of these matters, if they arise, would materially affect our business, financial condition, results of operations or cash flows, resolution of these matters will be subject to various uncertainties and could result in the expenditure of significant financial and managerial resources. Neither we, nor any of our subsidiaries are currently subject to any material legal proceeding, nor, to our knowledge, is any material legal proceeding pending or threatened against us or any of our subsidiaries.

ITEM 1A.
RISK FACTORS.
Our business is subject to certain risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. For a discussion of these risks, please refer to ~~this section and~~ the section captioned “Item 1A. Risk Factors” in Part I of our Annual ~~Report.~~Report on Form 10-K for the fiscal year ended September 30, 2020, as filed with the SEC on November 10, 2020. The risks described ~~below and~~ in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
~~The recently enacted legislation informally titled the Tax Cuts and Jobs Act and other legislative, regulatory and administrative developments may adversely affect the Company or its stockholders.~~
~~On December 22, 2017, President Trump signed into law P.L.115-97,~~ informally titled the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes major changes to the Code, including a number of provisions of the Code that affect the taxation of RICs and their stockholders. Certain provisions of the Tax Act that may impact us and our stockholders include:
temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal income tax rate will be reduced from 39.6% to 37% (through taxable years ending in 2025);
~~reducing the maximum corporate income tax rate from 35% to 21%;~~
permitting a deduction for certain pass-through business income, which generally will allow individuals, trusts, and estates to deduct up to 20% of such amounts, resulting in an effective maximum U.S. federal income tax rate of 29.6% on such dividends (through taxable years ending in 2025);
~~limiting the deduction for net operating losses to 80% of taxable income (prior to the application of the dividends paid deduction);~~
~~amending the limitation on the deduction of net interest expense for all businesses, other than certain electing businesses; and~~
~~eliminating the corporate alternative minimum tax.~~
The individual and collective impact of these provisions and other provisions of the Tax Act on the Company and its stockholders is uncertain, and may not become evident for some period of time. In addition, other legislative, regulatory or administrative changes may be enacted or promulgated, either prospectively or with retroactive effect, and may adversely affect the Company or its stockholders. The Company’s stockholders should consult their individual tax advisors regarding the implications of the Tax Act and other potential legislative, regulatory or administrative changes on their investment in GLAD’s securities.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Sales of Unregistered Securities
Not applicable.
Issuer Purchases of Equity Securities
Not applicable.

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES.
Not applicable.

ITEM 4.
MINE SAFETY DISCLOSURES.
Not applicable.

ITEM 5.
OTHER INFORMATION.
Not applicable.
54
ITEM 6.
EXHIBITS.

Exhibit

Description
3.1    Articles of Amendment and Restatement to the Articles of Incorporation, incorporated by reference to Exhibit 99.a.2 toPre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-63700), filed July 27, 2001.
3.2    Articles Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, including Appendix A thereto relating to the Term Preferred Shares, 7.125% Series 2016, incorporated by reference to Exhibit 2.a.2 to Post-Effective Amendment No. 5 to the Registration Statement on Form N-2 (File No. 333-162592), filed October 31, 2011.
3.3 ~~Articles~~ ~~Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, 6.75% Series~~ ~~2021, including Appendix A thereto, incorporated by reference to Exhibit~~ ~~3.3 to Form8-A~~ ~~(File No.~~ ~~001-35332),~~ ~~filed May~~ ~~15, 2014.~~
~~3.4~~ ~~Certificate of Correction to Articles~~ ~~Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, 6.75% Series~~ ~~2021, incorporated by reference to Exhibit 3.4 to the Quarterly Report on Form10-Q~~ ~~(File No.~~ ~~811-000000),~~ ~~filed July~~ ~~30, 2014.~~
~~3.5~~    Certificate of Correction to Articles Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, incorporated by reference to Exhibit 3.1 to the Current Report on Form8-K (File No.814-00237), filed October 29, 2015.
~~3.6~~  3.4    Articles Supplementary, incorporated by reference to Exhibit 3.1 to the Current Report on Form8-K (File No. 814-00237), filed September 21, 2017.
~~3.7~~  3.5    Articles Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, including Appendix A thereto relating to the 6.00% Series 2024 Term Preferred Stock, incorporated by reference to Exhibit 3.2 to the Current Report on Form8-K (File No. 814-00237), filed September 21, 2017.
~~3.8~~  3.6    Bylaws, incorporated by reference to Exhibit 99.b toPre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-63700), filed July 27, 2001.
~~3.9~~  3.7    Amendment to Bylaws, incorporated by reference to Exhibit 3.3 to the Quarterly Report on Form10-Q (File No. 814-00237), filed February 17, 2004.
~~3.10~~  3.8    Second Amendment to Bylaws, incorporated by reference to Exhibit 99.1 to the Current Report on Form8-K ~~(File~~(File No. 814-00237), filed July 10, 2007.
~~3.11~~  3.9    Third Amendment to Bylaws, incorporated by reference to Exhibit 99.1 to the Current Report on Form8-K (File No. 814-00237), filed June 10, 2011.
~~3.12~~  3.10    Fourth Amendment to Bylaws, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00237), filed November 29, 2016.
4.1    Form of Certificate for Common Stock, incorporated by reference to Exhibit 99.d.2 toPre-Effective Amendment No. 3 to the Registration Statement on FormN-2 (File No. 333-63700), filed August 23, 2001.
4.2    Indenture between the Registrant and U.S. Bank National Association, dated as of November 6, 2018, incorporated by reference to Exhibit 2.d.10 to Post-Effective Amendment No. 7 to the Registration Statement on Form N-2 (File No. 333-208637), filed November 6, 2018.
  4.3 First Supplemental Indenture between the Registrant and U.S. Bank National Association, dated as of ~~Certificate for 6.00% Series 2024 Term Preferred Stock,~~November 6, 2018, incorporated by reference to Exhibit 2.d.11 to Post-Effective Amendment No. 7 to the Registration Statement on Form N-2 (File No. 333-208637), filed November 6, 2018.
  4.4 Second Supplemental Indenture between the Registrant and U.S. Bank National Association, dated as of October 10, 2019, incorporated by reference to Exhibit 2.d.11 to Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No. 333-228720), filed October 10, 2019.
  4.5 Third Supplemental Indenture between Gladstone Capital Corporation and U.S. Bank National Association, dated as of December 15, 2020, incorporated by reference to Exhibit 4.1 to the Current Report on Form8-K (File No.814-00237), filed ~~September~~December ~~21, 2017.~~15, 2020.
1110.1    ~~Computation~~Amendment No. 7 to Fifth Amended and Restated Credit Agreement, dated as of ~~Per Share Earnings (included in the notes~~November 2, 2020 by and among Gladstone Business Loan, LLC, as Borrower, Gladstone Management Corporation, as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto.*
10.2 Amendment No. 8 to ~~the unaudited consolidated financial statements contained in this report).~~Fifth Amended and Restated Credit Agreement, dated as of December 9, 2020 by and among Gladstone Business Loan, LLC, as Borrower, Gladstone Management Corporation, as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto.*
31.1    Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*
31.2    Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*
32.1    Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.+
32.2    Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.+

*
Filed herewith
+
Furnished herewith
All other exhibits for which provision is made in the applicable regulations of the Securities and Exchange Commission are not required under the related instruction or are inapplicable and therefore have been omitted.
55
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GLADSTONE CAPITAL CORPORATION
By:
/s/ Nicole Schaltenbrand
Nicole Schaltenbrand

Chief Financial Officer and Treasurer
~~Date: February 5, 2018~~(principal financial and accounting officer)
Date: February 3, 2021

5658


Company and Investment^(A)(B)(W)(Z)	Principal/ Shares/ Units^(J)(X)		Cost		Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS^(M) – 132.4%
Secured First Lien Debt – 67.2%
Automobile – 1.7%
Meridian Rack & Pinion, Inc.^(S) – Term Debt (L + 11.5% 13.5% Cash, Due 12/2018)^(C)	$	4,140	$	4,140	$	3,643

Beverage, Food, and Tobacco – 3.2%
Triple H Food Processors, LLC - Line of Credit, $1,500 available (L + 6.8%, 8.0% Cash, Due 8/2018)^(C)		—		—		—
Triple H Food Processors, LLC – Term Debt (L + 8.3%, 9.5% Cash, Due 8/2020)^(C)		6,800		6,800		6,928

				6,800		6,928

Buildings and Real Estate – 1.0%
GFRC Holdings, LLC – Line of Credit, $20 available (L + 8.0%, 9.2% Cash, Due 9/2018)^(E)		1,180		1,180		1,180
GFRC Holdings, LLC – Term Debt (L + 8.0%, 9.2% Cash, Due 9/2018)^(E)		1,000		1,000		1,000

				2,180		2,180

Diversified/Conglomerate Service – 20.1%
IA Tech, LLC – Term Debt (L + 11.0%, 12.2% Cash, Due 6/2021)^(C)		23,000		23,000		23,633
Travel Sentry, Inc. – Term Debt (L + 9.0%, 10.3% Cash, Due 12/2021)^(C)(U)		8,902		8,902		9,170
Vision Government Solutions, Inc. – Line of Credit, $0 available (L + 8.8%, 10.0% Cash, Due 1/2019)^(C)		1,450		1,450		1,420
Vision Government Solutions, Inc. – Delayed Draw Term Loan, $900 available (10.0% Cash, Due 1/2019)^(C)(F)		1,600		1,600		1,485
Vision Government Solutions, Inc. – Term Debt (L + 8.8%, 10.0% Cash, Due 1/2019)^(C)		9,000		9,000		8,390

				43,952		44,098

Diversified/Conglomerate Manufacturing – 1.6%
Alloy Die Casting Co.^(S) – Term Debt (L + 11.5%, 13.5% Cash, Due 10/2018)^(C)(H)		5,235		5,235		3,272
Alloy Die Casting Co.^(S) – Term Debt (L + 11.5%, 13.5% Cash, Due 10/2018)^(C)(H)		75		75		47
Alloy Die Casting Co.^(S) – Term Debt (Due 10/2018)^(C)(P)		390		390		246

				5,700		3,565

Healthcare, education, and childcare – 9.8%
EL Academies, Inc. – Line of Credit (L + 9.5%, 10.7% Cash, Due 8/2020)^(I)		—		—		—
EL Academies, Inc. – Delayed Draw Term Loan (L + 9.5%, 10.7% Cash, Due 8/2022)^(I)		—		—		—
EL Academies, Inc. – Term Debt (L + 9.5%, 10.7% Cash, Due 8/2022)^(I)		12,000		12,000		12,000
TWS Acquisition Corporation – Term Debt (L + 8.0%, 9.2% Cash, Due 7/2020)^(C)		9,432		9,432		9,609

				21,432		21,609

Leisure, Amusement, Motion Pictures, Entertainment – 3.6%
Flight Fit N Fun LLC – Term Debt (L + 14.0%, 15.2% Cash, Due 9/2020)^(Q)(Y)		7,800		7,800		7,800

Machinery – 0.4%
Precision International, LLC – Term Debt (10.0% PIK, Due 9/2021)^(C)(F)		808		808		798

Oil and Gas – 9.2%
WadeCo Specialties, Inc. – Line of Credit, $425 available (L + 7.0%, 8.2% Cash, Due 4/2018)^(E)		2,575		2,575		2,575
WadeCo Specialties, Inc. – Term Debt (L + 7.0%, 8.2% Cash, Due 3/2019)^(E)		10,441		10,427		10,440
WadeCo Specialties, Inc. – Term Debt (L + 9.0%, 12.0% Cash, Due 3/2019)^(E)		7,000		7,000		7,000

				20,002		20,015

Personal andNon-Durable Consumer Products (Manufacturing Only) – 3.0%
Canopy Safety Brands, LLC – Line of Credit, $500 available (L + 6.5%, 7.7% Cash, Due 9/2019)^(C)		—		—		—
Canopy Safety Brands, LLC – Term Debt (L + 9.5%, 10.7% Cash, Due 9/2021)^(C)		6,600		6,600		6,616

				6,600		6,616

Printing and Publishing – 0.0%
Chinese Yellow Pages Company – Line of Credit, $0 available (PRIME + 4.0%, 8.0% Cash, Due 2/2015)^(E)(V)		107		107		—

Telecommunications – 13.6%
B+T Group Acquisition Inc.^(S) – Term Debt (L + 11.0%, 13.0% Cash, Due 12/2019)^(C)		6,000		6,000		5,955
NetFortris Corp. – Line of Credit, $2,000 available (L + 8.4%, 9.6% Cash, Due 11/2017)^(C)		—		—		—
NetFortris Corp. – Term Debt (L + 8.4%, 9.6% Cash, Due 2/2021)^(C)		24,000		24,000		24,240

				30,000		30,195

Total Secured First Lien Debt			$	149,521	$	147,447


Fiscal Year	Declaration Date	Record Date	Payment Date	Distribution per Series 2024 Term Preferred Share^(A)
2018	October 10, 2017	October 20, 2017	October 31, 2017	$	0.141667
	October 10, 2017	November 20, 2017	November 30, 2017		0.125
	October 10, 2017	December 19, 2017	December 29, 2017		0.125

		Three Months Ended December 31, 2017:		$	0.391667


Record Date	Payment Date		Distribution per Common Share
January 22, 2021		January 29, 2021	$	0.065
February 17, 2021		February 26, 2021		0.065
March 18, 2021		March 31, 2021		0.065

Total for the Quarter:			$	0.195


	As of December 31, 2017					Three Months Ended December 31, 2017
Company	Fair Value		% of Portfolio			Investment Income		% of Total Income
NetFortris Corp.	$	24,795		6.3	%	$	663		6.1	%
IA Tech, LLC		23,690		6.0			722		6.7
TapRoot Partners, Inc.		22,220		5.7			649		6.0
Impact! Chemical Technologies, Inc. ^(A)		20,336		5.2			45		0.4
WadeCo Specialties, Inc.		20,005		5.1			500		4.6

Subtotal—five largest investments		111,046		28.3			2,579		23.8
Other portfolio companies		281,384		71.7			8,268		76.2

Total Investment Portfolio	$	392,430		100.0	%	$	10,847		100.0	%


	As of December 31, 2016					Three Months Ended December 31, 2016
Company	Fair Value		% of Portfolio			Investment Income		% of Total Income
IA Tech, LLC	$	23,345		8.1	%	$	705		7.1	%
WadeCo Specialties, Inc.		18,443		6.4			477		4.8
United Flexible, Inc.		18,196		6.3			568		5.7
Lignetics, Inc.		13,809		4.8			429		4.3
AG Transportation Holdings, LLC		13,130		4.6			440		4.4

Subtotal—five largest investments		86,923		30.2			2,619		26.3
Other portfolio companies		201,323		69.8			7,351		73.7

Total Investment Portfolio	$	288,246		100.0	%	$	9,970		100.0	%


	Three Months Ended December 31, 2017
Portfolio Company	Realized Gain (Loss)			Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation			Net Gain (Loss)
Francis Drilling Fluids, Ltd.	$	—		$	2,429		$	—		$	2,429
LWO Acquisitions Company LLC		—			1,012			—			1,012
Edge Adhesives Holdings, Inc.		—			482			—			482
NetFortris Corp.		—			430			—			430
WadeCo Specialties, Inc.		—			227			—			227
United Flexible, Inc.		—			186			—			186
Vision Government Solutions, Inc.		—			178			—			178
Canopy Safety Brands, LLC		—			147			—			147
TapRoot Partners, Inc.		—			110			—			110
Alloy Die Casting, Co.		—			86			—			86
Flight Fit N Fun LLC		582			—			(725	)		(143	)
Lignetics, Inc.		—			(206	)		—			(206	)
Defiance Integrated Technologies, Inc.		—			(212	)		—			(212	)
Targus Cayman HoldCo, Ltd.		—			(249	)		—			(249	)
Vacation Rental Pros		—			(252	)		—			(252	)
Meridian Rack & Pinion, Inc.		—			(303	)		—			(303	)
Sunshine Media Holdings		—			(318	)		—			(318	)
L Discovery		—			(555	)		—			(555	)
New Trident Holdcorp, Inc.		—			(1,221	)		—			(1,221	)
Other, net (<$250)		(8	)		201			(87	)		106

Total:	$	574		$	2,172		$	(812	)	$	1,934


	Three Months Ended December 31, 2020
Portfolio Company	Realized Gain (Loss)			Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation		Net Gain (Loss)
AG Transportation Holdings, LLC	$	—		$	1,276		$	—	$	1,276
Triple H Food Processors, LLC		—			602			—		602
PIC 360, LLC		—			518			—		518
Antenna Research Associates, Inc.		—			494			—		494
R2i Holdings, LLC		—			459			—		459
Edmentum Ultimate Holdings, LLC		(2,351	)		—			2,770		419
Targus Cayman HoldCo, Ltd.		—			407			—		407
Café Zupas		—			324			—		324
Vertellus Holdings LLC		(41	)		—			313		272
EL Academies, Inc.		—			259			—		259
Keystone Acquisition Corp.		—			258			—		258
Tailwind Smith Cooper Intermediate Corporation		—			256			—		256
DKI Ventures, LLC		—			249			—		249
Medical Solutions Holdings, Inc.		—			237			—		237
Magpul Industries Corp.		—			210			—		210
American Trailer Rental Group LLC		—			198			—		198
TNCP Intermediate HoldCo, LLC		—			192			—		192
Gray Matter Systems, LLC		—			173			—		173
Drive Chassis Holdco, LLC		—			168			—		168
LWO Acquisitions Company LLC		—			150			—		150
ENET Holdings, LLC		—			(374	)		—		(374	)
Imperative Holdings Corporation		—			(793	)		—		(793	)
Other, net (<$500)		248			149			—		397

Total:	$	(2,144	)	$	5,412		$	3,083	$	6,351


	Payments Due by Period										Payments Due by Period
Contractual Obligations^(A)	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Credit Facility^(B)	$	—	$	130,500	$	—	$	—	$	130,500	$	—	$	16,300	$	—	$	—	$	16,300
Mandatorily Redeemable Preferred Stock		—		—		—		51,750		51,750
Notes Payable												—		57,500		38,813		100,000		196,313
Interest expense on debt obligations^(C)		7,258		11,506		6,210		3,105		28,079		13,146		24,080		12,804		427		50,457

Total	$	7,258	$	142,006	$	6,210	$	54,855	$	210,329	$	13,146	$	97,880	$	51,617	$	100,427	$	263,070


	As of December 31,		As of September 30,
Rating	2017		2017		As of December 31, 2020		As of September 30, 2020
Highest		9.0		9.0		10.0		10.0
Average		5.8		5.7		6.4		6.3
Weighted Average		6.0		5.8		6.7		6.5
Lowest		1.0		1.0		1.0		1.0


Variable rates	~~90.6~~79.6	%
Fixed rates	~~9.4~~20.4

Total:	100.0	%


Exhibit		Description

3.1		Articles of Amendment and Restatement to the Articles of Incorporation, incorporated by reference to Exhibit 99.a.2 toPre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-63700), filed July 27, 2001.

3.2		Articles Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, including Appendix A thereto relating to the Term Preferred Shares, 7.125% Series 2016, incorporated by reference to Exhibit 2.a.2 to Post-Effective Amendment No. 5 to the Registration Statement on Form N-2 (File No. 333-162592), filed October 31, 2011.

3.3		~~Articles~~ ~~Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, 6.75% Series~~ ~~2021, including Appendix A thereto, incorporated by reference to Exhibit~~ ~~3.3 to Form8-A~~ ~~(File No.~~ ~~001-35332),~~ ~~filed May~~ ~~15, 2014.~~

~~3.4~~		~~Certificate of Correction to Articles~~ ~~Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, 6.75% Series~~ ~~2021, incorporated by reference to Exhibit 3.4 to the Quarterly Report on Form10-Q~~ ~~(File No.~~ ~~811-000000),~~ ~~filed July~~ ~~30, 2014.~~

~~3.5~~		Certificate of Correction to Articles Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, incorporated by reference to Exhibit 3.1 to the Current Report on Form8-K (File No.814-00237), filed October 29, 2015.

~~3.6~~ 3.4		Articles Supplementary, incorporated by reference to Exhibit 3.1 to the Current Report on Form8-K (File No. 814-00237), filed September 21, 2017.

~~3.7~~ 3.5		Articles Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, including Appendix A thereto relating to the 6.00% Series 2024 Term Preferred Stock, incorporated by reference to Exhibit 3.2 to the Current Report on Form8-K (File No. 814-00237), filed September 21, 2017.

~~3.8~~ 3.6		Bylaws, incorporated by reference to Exhibit 99.b toPre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-63700), filed July 27, 2001.

~~3.9~~ 3.7		Amendment to Bylaws, incorporated by reference to Exhibit 3.3 to the Quarterly Report on Form10-Q (File No. 814-00237), filed February 17, 2004.

~~3.10~~ 3.8		Second Amendment to Bylaws, incorporated by reference to Exhibit 99.1 to the Current Report on Form8-K ~~(File~~(File No. 814-00237), filed July 10, 2007.

~~3.11~~ 3.9		Third Amendment to Bylaws, incorporated by reference to Exhibit 99.1 to the Current Report on Form8-K (File No. 814-00237), filed June 10, 2011.

~~3.12~~ 3.10		Fourth Amendment to Bylaws, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00237), filed November 29, 2016.

4.1		Form of Certificate for Common Stock, incorporated by reference to Exhibit 99.d.2 toPre-Effective Amendment No. 3 to the Registration Statement on FormN-2 (File No. 333-63700), filed August 23, 2001.

4.2		Indenture between the Registrant and U.S. Bank National Association, dated as of November 6, 2018, incorporated by reference to Exhibit 2.d.10 to Post-Effective Amendment No. 7 to the Registration Statement on Form N-2 (File No. 333-208637), filed November 6, 2018.

4.3		First Supplemental Indenture between the Registrant and U.S. Bank National Association, dated as of ~~Certificate for 6.00% Series 2024 Term Preferred Stock,~~November 6, 2018, incorporated by reference to Exhibit 2.d.11 to Post-Effective Amendment No. 7 to the Registration Statement on Form N-2 (File No. 333-208637), filed November 6, 2018.

4.4		Second Supplemental Indenture between the Registrant and U.S. Bank National Association, dated as of October 10, 2019, incorporated by reference to Exhibit 2.d.11 to Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No. 333-228720), filed October 10, 2019.

4.5		Third Supplemental Indenture between Gladstone Capital Corporation and U.S. Bank National Association, dated as of December 15, 2020, incorporated by reference to Exhibit 4.1 to the Current Report on Form8-K (File No.814-00237), filed ~~September~~December ~~21, 2017.~~15, 2020.

1110.1		~~Computation~~Amendment No. 7 to Fifth Amended and Restated Credit Agreement, dated as of ~~Per Share Earnings (included in the notes~~November 2, 2020 by and among Gladstone Business Loan, LLC, as Borrower, Gladstone Management Corporation, as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto.*

10.2		Amendment No. 8 to ~~the unaudited consolidated financial statements contained in this report).~~Fifth Amended and Restated Credit Agreement, dated as of December 9, 2020 by and among Gladstone Business Loan, LLC, as Borrower, Gladstone Management Corporation, as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto.*

31.1		Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.+

32.2		Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.+


	GLADSTONE CAPITAL CORPORATION

	By:	/s/ Nicole Schaltenbrand
	Nicole Schaltenbrand
	Chief Financial Officer and Treasurer
~~Date: February 5, 2018~~(principal financial and accounting officer)