UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-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, 2020~~September 30, 2021

☐	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: 814-00704

GLADSTONE INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE

83-0423116

(State or other jurisdiction of

of incorporation or organization)

(I.R.S. Employer

Identification No.)


1521 WESTBRANCH DRIVE, SUITE 100
MCLEAN, VIRGINIA		22102
(Address of principal executive offices)		(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	GAIN	The Nasdaq Stock Market LLC
~~6.250% Series D Cumulative Term Preferred Stock, $0.001 par value per share~~5.00% Notes due 2026	~~GAINM~~GAINN	The Nasdaq Stock Market LLC
~~6.375% Series E Cumulative Term Preferred Stock, $0.001 par value per share~~4.875% Notes due 2028	~~GAINL~~GAINZ	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	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 Rule 12b-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~~November 1, 2021 was 33,205,023.

GLADSTONE INVESTMENT CORPORATION

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION:

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Assets and Liabilities as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020~~2021	2

	Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2021 and 2020 ~~and 2019~~	3

	Consolidated Statements of Changes in Net Assets for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2021 and 2020	4
	Consolidated Statements of Cash Flows for the six months ended September 30, 2021 and ~~2019~~2020	5

	Consolidated ~~Statements~~Schedules of ~~Cash Flows for the nine months ended December~~Investments as of September 30, 2021 and March 31, ~~2020 and 2019~~2021	6

	~~Consolidated Schedules of Investments as of December 31, 2020 and March 31, 2020~~	7

	Notes to Consolidated Financial Statements	1918

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Overview	4443
	Results of Operations	48
	~~Results of Operations~~	49

	Liquidity and Capital Resources	5756

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6463

Item 4.	Controls and Procedures	6463

PART II.	OTHER INFORMATION:

Item 1.	Legal Proceedings	6564

Item 1A.	Risk Factors	6564

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6564

Item 3.	Defaults Upon Senior Securities	6564

Item 4.	Mine Safety Disclosures	6564

Item 5.	Other Information	6564

Item 6.	Exhibits	6665

SIGNATURES		6766

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)


	December 31,			March 31,
	2020			2020			September 30, 2021			March 31, 2021
ASSETS
Investments at fair value
Non-Control/Non-Affiliate investments (Cost of $292,968 and $276,589, respectively)	$	290,136		$	292,129
Affiliate investments (Cost of $340,401 and $311,481, respectively)		289,421			247,637
Control investments (Cost of $24,512 and $21,512, respectively)		31,331			26,158
Non-Control/Non-Affiliate investments (Cost of $350,516 and $297,400, respectively)							$	383,339		$	298,222
Affiliate investments (Cost of $340,703 and $341,651, respectively)								353,164			307,977
Control investments (Cost of $0 and $24,512, respectively)								—			27,630
Cash and cash equivalents		1,794			2,778			2,184			2,062
Restricted cash and cash equivalents		866			1,282			238			336
Interest receivable		1,775			3,429			2,651			3,369
Due from administrative agent		4,379			771			1,820			1,164
Deferred financing costs, net		586			991			1,164			1,359
Other assets, net		1,414			1,202			1,372			1,612

TOTAL ASSETS	$	621,702		$	576,377		$	745,932		$	643,731

LIABILITIES
Borrowings:
Line of credit at fair value (Cost of $84,000 and $49,200, respectively)	$	84,000		$	49,200
Line of credit at fair value (Cost of $8,900 and $22,400, respectively)							$	8,900		$	22,400
Notes payable, net								255,626			123,883
Secured borrowing		5,096			5,096			5,096			5,096

Total borrowings		89,096			54,296			269,622			151,379
Mandatorily redeemable preferred stock, $0.001 par value per share, $25.00 liquidation preference per share; 8,990,000 and 6,500,000 shares authorized; 6,074,853 and 5,290,000 shares issued and outstanding, respectively, net		148,753			129,160
Mandatorily redeemable preferred stock, $0.001 par value per share, $25.00 liquidation preference per share; 5,990,000 shares authorized; 0 and 3,774,853 shares issued and outstanding, respectively, net								—			92,209
Accounts payable and accrued expenses		1,239			1,222			1,475			563
Interest payable								1,901			591
Fees due to Adviser^(A)		11,871			7,178			31,399			15,664
Fee due to Administrator^(A)		462			582			571			577
Other liabilities		1,458			14,908			263			384

TOTAL LIABILITIES	$	252,879		$	207,346		$	305,231		$	261,367

Commitments and contingencies^(B)
NET ASSETS	$	368,823		$	369,031		$	440,701		$	382,364

ANALYSIS OF NET ASSETS
Common stock, $0.001 par value per share, 100,000,000 shares authorized, 33,205,023 and 33,049,463 shares issued and outstanding, respectively	$	33		$	33
Common stock, $0.001 par value per share, 100,000,000 shares authorized, 33,205,023 shares issued and outstanding							$	33		$	33
Capital in excess of par value		401,755			401,023			398,083			400,796
Cumulative net unrealized depreciation of investments		(46,993	)		(43,658	)
Underdistributed net investment income		3,622			6,370
Cumulative net unrealized appreciation (depreciation) of investments								45,284			(29,734	)
(Overdistributed) underdistributed net investment income								(10,098	)		2,592
Accumulated net realized gain in excess of distributions		10,406			5,263			7,399			8,677

Total distributable earnings		(32,965	)		(32,025	)		42,585			(18,465	)

TOTAL NET ASSETS	$	368,823		$	369,031		$	440,701		$	382,364

NET ASSET VALUE PER SHARE AT END OF PERIOD	$	11.11		$	11.17
NET ASSET VALUE PER SHARE							$	13.27		$	11.52

^(A)

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

^(B)

Refer to Note 10 — Commitments and Contingencies in the accompanying Notes to Consolidated Financial Statements for additional information.

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate investments	$	6,804		$	7,234		$	19,782		$	19,710		$	7,407		$	7,014		$	14,284		$	12,978
Affiliate investments		5,123			4,668			14,087			17,751			6,678			4,616			15,509			8,964
Control investments		220			211			639			639			213			210			497			419
Cash and cash equivalents		1			13			5			44			—			—			—			4

Total interest income		12,148			12,126			34,513			38,144			14,298			11,840			30,290			22,365
Dividend income
Non-Control/Non-Affiliate investments		908			3,622			908			6,349			1			—			3			—
Affiliate investments		4,127			—			4,127			3,080			1,589			—			1,589			—

Total dividend income		5,035			3,622			5,035			9,429			1,590			—			1,592			—
Success fee income
Non-Control/Non-Affiliate investments		189			248			371			248			1,650			—			1,650			182
Affiliate investments		—			—			—			2,121			1,000			—			3,032			—

Total success fee income		189			248			371			2,369			2,650			—			4,682			182

Total investment income		17,372			15,996			39,919			49,942			18,538			11,840			36,564			22,547

EXPENSES
Base management fee^(A)		3,116			2,970			8,961			9,285			3,577			2,989			6,897			5,845
Loan servicing fee^(A)		1,786			1,794			5,242			5,139			1,794			1,747			3,662			3,456
Incentive fee^(A)		3,756			2,873			3,454			6,042			7,351			452			19,599			(302	)
Administration fee^(A)		382			369			1,218			1,106			571			390			970			836
Interest expense on borrowings		1,092			964			3,064			3,230			3,082			1,055			5,382			1,972
Dividends on mandatorily redeemable preferred stock		2,291			2,089			6,551			6,269			802			2,158			2,306			4,260
Amortization of deferred financing costs and discounts		451			373			1,291			1,119			452			466			908			840
Professional fees		322			384			1,147			1,355			343			254			649			825
Other general and administrative expenses		496			633			2,031			2,587			1,125			778			2,173			1,535

Expenses before credits from Adviser		13,692			12,449			32,959			36,132			19,097			10,289			42,546			19,267

Credits to base management fee – loan servicing fee^(A)		(1,786	)		(1,794	)		(5,242	)		(5,139	)		(1,794	)		(1,747	)		(3,662	)		(3,456	)
Credits to fees from Adviser—other^(A)		(789	)		(817	)		(2,594	)		(2,647	)		(930	)		(1,070	)		(2,181	)		(1,805	)

Total expenses, net of credits to fees		11,117			9,838			25,123			28,346			16,373			7,472			36,703			14,006

NET INVESTMENT INCOME		6,255			6,158			14,796			21,596
NET INVESTMENT INCOME (LOSS)														2,165			4,368			(139	)		8,541

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss):
Non-Control/Non-Affiliate investments		5,816			33,509			5,876			34,830			—			47			143			60
Affiliate investments		3,289			496			4,603			20,852			464			574			2,250			1,314
Other														(1,998	)		—			(1,998	)		—

Total net realized gain		9,105			34,005			10,479			55,682
Total net realized (loss) gain														(1,534	)		621			395			1,374
Net unrealized appreciation (depreciation):
Non-Control/Non-Affiliate investments		(5,358	)		(29,063	)		(18,372	)		(21,598	)		15,101			(4,076	)		32,003			(13,014	)
Affiliate investments		4,894			(4,513	)		12,864			(30,631	)		16,926			6,612			46,134			7,970
Control investments		375			6,577			2,173			5,329			(4,523	)		(895	)		(3,119	)		1,798
Other		—			154			—			(10	)

Total net unrealized depreciation		(89	)		(26,845	)		(3,335	)		(46,910	)
Total net unrealized appreciation (depreciation)														27,504			1,641			75,018			(3,246	)

Net realized and unrealized gain (loss)		9,016			7,160			7,144			8,772			25,970			2,262			75,413			(1,872	)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	15,271		$	13,318		$	21,940		$	30,368		$	28,135		$	6,630		$	75,274		$	6,669

BASIC AND DILUTED PER COMMON SHARE:
Net investment income (loss)													$	0.07		$	0.13		$	—		$	0.26

Net increase in net assets resulting from operations													$	0.85		$	0.20		$	2.27		$	0.20

WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted														33,205,023			33,205,023			33,205,023			33,148,652

^(A)

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

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

~~GLADSTONE INVESTMENT CORPORATION~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)~~

~~(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)~~

~~(UNAUDITED)~~

   Three Months Ended
December 31,    Nine Months Ended
December 31,
   2020    2019    2020    2019
BASIC AND DILUTED PER COMMON SHARE:

Net investment income
   $ 0.19    $ 0.19    $ 0.45    $ 0.66








Net increase in net assets resulting from operations
   $ 0.46    $ 0.41    $ 0.66    $ 0.93








WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:

Basic and diluted
   33,205,023    32,822,459    33,167,511    32,822,459

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(IN THOUSANDS)

(UNAUDITED)


	2020			2019			2021			2020
NET ASSETS, MARCH 31	$	369,031		$	407,110		$	382,364		$	369,031
OPERATIONS
Net investment income		4,173			8,855
Net investment (loss) income								(2,304	)		4,173
Net realized gain on investments		753			533			1,929			753
Net unrealized depreciation of investments		(4,887	)		(3,047	)
Net unrealized appreciation of other		—			(295	)
Net unrealized appreciation (depreciation) of investments								47,514			(4,887	)

Net increase in net assets from operations		39			6,046			47,139			39

DISTRIBUTIONS^(A)
Distributions to common stockholders from net investment income ($0.28 and $0.20 per share, respectively)		(9,272	)		(6,523	)
Distributions to common stockholders from net realized gains ($0.02 and $0.09 per share, respectively)		(666	)		(3,127	)
Distributions to common stockholders from net investment income ($0.20 and $0.28 per share, respectively)								(6,593	)		(9,272	)
Distributions to common stockholders from net realized gains ($0.07 and $0.02 per share, respectively)								(2,372	)		(666	)

Net decrease in net assets from distributions		(9,938	)		(9,650	)		(8,965	)		(9,938	)

CAPITAL ACTIVITY
Issuance of common stock		1,772			—			—			1,772
Discounts, commissions, and offering costs for issuance of common stock		(35	)		—			—			(35	)

Net increase in net assets from capital activity		1,737			—			—			1,737

NET DECREASE IN NET ASSETS		(8,162	)		(3,604	)
NET INCREASE (DECREASE) IN NET ASSETS								38,174			(8,162	)

NET ASSETS, JUNE 30	$	360,869		$	403,506		$	420,538		$	360,869

OPERATIONS
Net investment income		4,368			6,583			2,165			4,368
Net realized gain on investments		621			21,144			464			621
Net unrealized appreciation (depreciation) of investments		1,641			(16,854	)
Net unrealized depreciation of other		—			131
Net realized loss on other								(1,998	)		—
Net unrealized appreciation of investments								27,504			1,641

Net increase in net assets from operations		6,630			11,004			28,135			6,630

DISTRIBUTIONS^(A)
Distributions to common stockholders from net investment income ($0.20 and $0.16 per share, respectively)		(6,553	)		(5,236	)
Distributions to common stockholders from net realized gains ($0.01 and $0.07 per share, respectively)		(420	)		(2,444	)
Distributions to common stockholders from net investment income ($0.16 and $0.20 per share, respectively)								(5,490	)		(6,553	)
Distributions to common stockholders from net realized gains ($0.08 and $0.01 per share, respectively)								(2,482	)		(420	)

Net decrease in net assets from distributions		(6,973	)		(7,680	)		(7,972	)		(6,973	)

NET (DECREASE) INCREASE IN NET ASSETS		(343	)		3,324
NET INCREASE (DECREASE) IN NET ASSETS								20,163			(343	)

NET ASSETS, SEPTEMBER 30	$	360,526		$	406,830		$	440,701		$	360,526

OPERATIONS
Net investment income	$	6,255		$	6,158
Net realized gain on investments		9,105			34,005
Net unrealized depreciation of investments		(89	)		(26,999	)
Net unrealized depreciation of other		—			154

Net increase in net assets from operations		15,271			13,318

DISTRIBUTIONS^(A)
Distributions to common stockholders from net investment income ($0.20 and $0.20 per share, respectively)		(6,619	)		(6,533	)
Distributions to common stockholders from realized gains ($0.01 and $0.09 per share, respectively)		(355	)		(3,117	)

Net decrease in net assets from distributions		(6,974	)		(9,650	)

NET INCREASE IN NET ASSETS		8,297			3,668

NET ASSETS, DECEMBER 31	$	368,823		$	410,498

^(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 INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)


	Nine Months Ended December 31,						Six Months Ended September 30,
	2020			2019			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	21,940		$	30,368		$	75,274		$	6,669
Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in) provided by operating activities:
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Purchase of investments		(89,571	)		(95,304	)		(47,550	)		(57,382	)
Principal repayments of investments		20,734			79,216			14,060			1,000
Net proceeds from the sale of investments		30,515			87,781			8,137			1,104
Net realized gain on investments		(10,479	)		(55,682	)		(2,393	)		(1,374	)
Net unrealized depreciation of investments		3,335			46,900
Net unrealized appreciation of other		—			10
Net realized loss on other								1,998			—
Net unrealized (appreciation) depreciation of investments								(75,018	)		3,246
Amortization of premiums, discounts, and acquisition costs, net		(14	)		(14	)		(9	)		(9	)
Amortization of deferred financing costs and discounts		1,291			1,119			908			840
Bad debt expense, net of recoveries		61			311			568			60
Changes in assets and liabilities:
Decrease in interest receivable		1,610			158			259			1,232
Increase in due from administrative agent		(3,608	)		(1,176	)		(656	)		(1,342	)
Decrease (increase) in other assets, net		1			(373	)		242			(100	)
Increase in accounts payable and accrued expenses		17			1,163
Increase (decrease) in accounts payable and accrued expenses								913			(324	)
Increase in interest payable								1,311			108
Increase in fees due to Adviser^(A)		4,663			1,655			15,698			525
(Decrease) increase in fee due to Administrator^(A)		(120	)		138
Decrease in fee due to Administrator^(A)								(6	)		(224	)
Decrease in other liabilities		(12,934	)		(9,934	)		(22	)		(13,412	)

Net cash (used in) provided by operating activities		(32,559	)		86,336
Net cash used in operating activities								(6,286	)		(59,383	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock		1,772			—			—			1,772
Discounts, commissions, and offering costs for issuance of common stock		(31	)		—			—			(31	)
Proceeds from line of credit		111,700			131,400			62,700			81,500
Repayments on line of credit		(76,900	)		(180,200	)		(76,200	)		(14,100	)
Proceeds from issuance of notes payable								134,550			—
Proceeds from issuance of mandatorily redeemable preferred stock		19,276			—			—			6,283
Redemption of mandatorily redeemable preferred stock								(94,371	)		—
Deferred financing and offering costs		(773	)		(133	)		(3,432	)		(634	)
Distributions paid to common stockholders		(23,885	)		(26,980	)		(16,937	)		(16,911	)

Net cash provided by (used in) financing activities		31,159			(75,913	)
Net cash provided by financing activities								6,310			57,879

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS		(1,400	)		10,423
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS								24			(1,504	)

CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT BEGINNING OF PERIOD		4,060			3,605
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD								2,398			4,060

CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD	$	2,660		$	14,028
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD							$	2,422		$	2,556

CASH PAID FOR INTEREST	$	2,370		$	2,204		$	3,286		$	1,374

^(A)

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

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

~~DECEMBER 31, 2020~~SEPTEMBER 30, 2021

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J)    Cost    Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS^(N) – 78.8%

Secured First Lien Debt – 49.6%

Diversified/Conglomerate Manufacturing – 1.2%

Phoenix Door Systems, Inc. – Line of Credit, $200 available (L+7.0%, 9.0% Cash (0.3% Unused Fee), Due 3/2022)^(L)
   $ 950    $ 950    $ 950
Phoenix Door Systems, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 9/2024)^(L)
   3,200    3,200    3,200




      4,150    4,150
Diversified/Conglomerate Services – 30.5%

Bassett Creek Services, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 4/2023)^(K)
   37,500    37,500    36,141
Counsel Press, Inc. – Term Debt (L+11.8%, 12.8% Cash, Due 3/2023)^(L)
   18,000    18,000    18,000
Counsel Press, Inc. – Term Debt (L+13.0%, 14.0% Cash, Due 3/2023)^(L)
   5,500    5,500    5,500
Horizon Facilities Services, Inc. – Term Debt (L+9.5%, 12.0% Cash, Due 6/2024)^(G)(L)
   27,700    27,700    27,700
Mason West, LLC – Line of Credit, $3,000 available (L+8.0%, 10.0% Cash, Due 7/2021)^(L)
   —      —      —
Mason West, LLC – Term Debt (L+10.0%, 12.5% Cash, Due 7/2025)^(L)
   25,250    25,250    25,250




      113,950    112,591
Healthcare, Education, and Childcare – 5.4%

Educators Resource, Inc. – Term Debt (L+10.5%, 13.0% Cash, Due 11/2023)^(L)
   20,000    20,000    20,000
Home and Office Furnishings, Housewares, and Durable Consumer Products – 6.7%

Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023)^(L)
   17,700    17,700    17,700
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023)^(L)
   6,850    6,850    6,850




      24,550    24,550
Leisure, Amusement, Motion Pictures, and Entertainment – 5.8%

Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 8/2024)^(L)
   13,081    13,081    13,081
Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 8/2024)^(L)
   8,500    8,500    8,500




      21,581    21,581




Total Secured First Lien Debt
      $ 184,231    $ 182,872




Secured Second Lien Debt – 11.4%

Automobile – 1.1%

Country Club Enterprises, LLC – Term Debt (L+8.0%, 10.0% Cash, Due 2/2022)^(K)
   $ 4,000    $ 4,000    $ 3,880
Country Club Enterprises, LLC – Guaranty ($1,000)^(T)
   —      —      —




      4,000    3,880
Cargo Transport – 3.5%

Diligent Delivery Systems – Term Debt (L+9.0%, 11.0% Cash, Due 11/2022)^(Q)
   13,000    12,965    13,000
Home and Office Furnishings, Housewares, and Durable Consumer Products – 3.6%

Ginsey Home Solutions, Inc. – Term Debt (L+10.0%, 13.5% Cash, Due 1/2025)^(H)(L)
   13,300    13,300    13,300
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 3.2%

SBS Industries Holdings, Inc. – Term Debt (L+12.0%, 14.0% Cash, Due 11/2024)^(L)
   11,736    11,736    11,736




Total Secured Second Lien Debt
      $ 42,001    $ 41,916

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


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)		Cost		Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS^(N) – 87.1%
Secured First Lien Debt – 45.0%
Diversified/Conglomerate Manufacturing – 1.0%
Phoenix Door Systems, Inc. – Line of Credit, $100 available (L+7.0%, 9.0% Cash (0.3% Unused Fee), Due 3/2022)^(K)	$	1,350	$	1,350	$	1,330
Phoenix Door Systems, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 9/2024)^(K)		3,200		3,200		3,152

				4,550		4,482
Diversified/Conglomerate Services – 26.8%
Bassett Creek Services, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 4/2023)^(L)		37,500		37,500		37,500
Counsel Press, Inc. – Term Debt (L+11.8%, 12.8% Cash, Due 3/2023)^(L)		21,100		21,100		21,100
Counsel Press, Inc. – Term Debt (L+13.0%, 14.0% Cash, Due 3/2023)^(L)		6,400		6,400		6,400
Horizon Facilities Services, Inc. – Term Debt (L+9.5%, 12.0% Cash, Due 6/2024)^(L)		27,700		27,700		27,700
Mason West, LLC – Term Debt (L+10.0%, 12.5% Cash, Due 7/2025)^(L)		25,250		25,250		25,250

				117,950		117,950
Healthcare, Education, and Childcare – 4.5%
Educators Resource, Inc. – Term Debt (L+10.5%, 13.0% Cash, Due 11/2023)^(L)		20,000		20,000		20,000

Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.6%
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023)^(L)		17,700		17,700		17,700
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023)^(L)		6,850		6,850		6,850

				24,550		24,550
Hotels, Motels, Inns, and Gaming Total – 2.2%
Nocturne Villa Rentals, Inc. – Line of Credit, $2,200 available (L+8.0%, 10.0% Cash, Due 6/2022)^(L)		800		800		800
Nocturne Villa Rentals, Inc. – Term Debt (L+10.5%, 12.5% Cash, Due 6/2026)^(L)		8,700		8,700		8,700

				9,500		9,500
Leisure, Amusement, Motion Pictures, and Entertainment – 4.9%
Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 8/2024)^(L)		13,081		13,081		13,081
Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 8/2024)^(L)		8,500		8,500		8,500

				21,581		21,581

Total Secured First Lien Debt			$	198,131	$	198,063

Secured Second Lien Debt – 15.2%
Aerospace and Defense – 5.8%
Galaxy Technologies Holdings, Inc. – Term Debt (L+4.1%, 7.1% Cash, Due 10/2026)^(L)	$	6,500	$	6,500	$	6,500
Galaxy Technologies Holdings, Inc. – Term Debt (L+7.0%, 10.0% Cash, Due 10/2026)^(L)		18,796		18,796		18,796

				25,296		25,296
Automobile – 0.9%
Country Club Enterprises, LLC – Term Debt (L+8.0%, 10.0% Cash, Due 2/2022)^(K)		4,000		4,000		3,960
Country Club Enterprises, LLC – Guaranty ($1,000)^(T)		—		—		—

				4,000		3,960
Cargo Transport – 3.0%
Diligent Delivery Systems – Term Debt (L+9.0%, 11.0% Cash, Due 11/2022)^(K)		13,000		12,979		13,015

Home and Office Furnishings, Housewares, and Durable Consumer Products – 3.0%
Ginsey Home Solutions, Inc. – Term Debt (L+10.0%, 13.5% Cash, Due 1/2025)^(H)(L)		13,300		13,300		13,300

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 2.5%
SBS Industries Holdings, Inc. – Term Debt (L+7.0%, 9.0% Cash, Due 11/2024)^(G)(K)		11,736		11,736		11,032

Total Secured Second Lien Debt			$	67,311	$	66,603

~~GLADSTONE INVESTMENT CORPORATION~~

~~CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)~~

~~DECEMBER 31, 2020~~

~~(DOLLAR AMOUNTS IN THOUSANDS)~~

~~(UNAUDITED)~~

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J) Cost    Fair Value
Preferred Equity – 17.0%

Diversified/Conglomerate Services – 8.8%

Bassett Creek Services, Inc. – Preferred Stock^(C)(L)
   $ 4,900 $ 4,900    $ —
Counsel Press, Inc. – Preferred Stock^(C)(L)
   6,995 6,995    18,744
Horizon Facilities Services, Inc. – Preferred Stock^(C)(L)
   10,080 10,080    2,194
Mason West, LLC – Preferred Stock^(C)(L)
   11,206 11,206    11,360




   33,181    32,298
Healthcare, Education, and Childcare – 2.4%

Educators Resource, Inc. – Preferred Stock^(C)(L)
   8,560 8,560    8,898
Home and Office Furnishings, Housewares, and Durable Consumer Products – 3.9%

Brunswick Bowling Products, Inc. – Preferred Stock^(C)(L)
   6,653 6,653    3,509
Ginsey Home Solutions, Inc. – Preferred Stock^(C)(L)
   19,280 9,583    10,570




   16,236    14,079
Leisure, Amusement, Motion Pictures, and Entertainment – 1.5%

Schylling, Inc. – Preferred Stock^(C)(L)
   4,000 4,000    5,401
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.4%

SBS Industries Holdings, Inc. – Preferred Stock^(C)(L)
   27,705 2,771    1,580




Total Preferred Equity
   $ 64,748    $ 62,256




Common Equity/Equivalents – 0.8%

Cargo Transport – 0.7%

Diligent Delivery Systems – Common Stock Warrants^(C)(L)(Q)
   8 % $ 500    $ 2,738
Diversified/Conglomerate Manufacturing – 0.1%

Phoenix Door Systems, Inc. – Common Stock^(C)(L)
   2,515 1,200    269
Home and Office Furnishings, Housewares, and Durable Consumer Products – 0.0%

Ginsey Home Solutions, Inc. – Common Stock^(C)(L)
   63,747 8    —
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0%

SBS Industries Holdings, Inc. – Common Stock^(C)(L)
   221,500 222    —
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%

Funko Acquisition Holdings, LLC^(M) – Common Units^(C)(S)
   12,180 58    85




Total Common Equity/Equivalents
   $ 1,988    $ 3,092




Total Non-Control/Non-Affiliate Investments
   $ 292,968    $ 290,136

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

~~DECEMBER 31, 2020~~SEPTEMBER 30, 2021

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J)    Cost    Fair Value
AFFILIATE INVESTMENTS^(O) – 78.5%

Secured First Lien Debt – 48.6%

Beverage, Food, and Tobacco – 2.5%

Head Country, Inc. – Term Debt (L+10.5%, 12.5% Cash, Due 2/2021)^(L)
   $ 9,050    $ 9,050    $ 9,050
Chemicals, Plastics, and Rubber – 5.7%

PSI Molded Plastics, Inc. – Term Debt (L+5.5%, 7.0% Cash, Due 1/2024)^(G)(L)
   26,618    26,618    20,981
Diversified/Conglomerate Manufacturing – 5.6%

D.P.M.S., Inc. – Line of Credit, $250 available (L+6.5%, 9.0% Cash (0.5% Unused Fee), Due 10/2021)^(L)
   1,250    1,250    1,250
D.P.M.S., Inc. – Term Debt (10.0% Cash, Due 10/2023)^(I)(L)
   10,796    10,796    6,354
Edge Adhesives Holdings, Inc.^(M) – Line of Credit, $0 available (L+8.0%, 10.0% Cash, Due 9/2021)^(K)
   1,020    1,020    992
Edge Adhesives Holdings, Inc.^(M) – Term Debt (L+10.5%, 12.5% Cash, Due 2/2022)^(K)
   9,300    9,300    9,044
Edge Adhesives Holdings, Inc.^(M) – Term Debt (L+11.8%, 13.8% Cash, Due 2/2022)^(K)
   3,000    3,000    2,918




      25,366    20,558
Diversified/Conglomerate Services – 13.7%

ImageWorks Display and Marketing Group, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 11/2022)^(L)
   22,000    22,000    22,000
The Maids International, LLC – Line of Credit, $1,000 available (L+7.5%, 9.5% Cash (0.3% Unused Fee), Due 3/2021)^(L)
   —      —      —
The Maids International, LLC – Term Debt (L+10.5%, 12.0% Cash, Due 3/2025)^(L)
   28,560    28,560    28,560




      50,560    50,560
Home and Office Furnishings, Housewares, and Durable Consumer Products – 7.3%

Old World Christmas – Secured First Lien Term Loan (L+9.5%, 11.0% Cash, Due 12/2025)^(L)
   27,000    27,000    27,000
Leisure, Amusement, Motion Pictures, and Entertainment – 2.4%

SOG Specialty Knives & Tools, LLC – Term Debt (Due 12/2023)^(L)(R)
   538    538    538
SOG Specialty Knives & Tools, LLC – Term Debt (L+4.0%, 6.0% Cash, Due 12/2023)^(G)(L)
   8,399    8,399    8,399




      8,937    8,937
Personal and Non-Durable Consumer Products (Manufacturing Only) – 7.2%

The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 4/2021)^(G)(L)
   3,400    3,400    3,400
Pioneer Square Brands, Inc. – Term Debt (L+12.0%, 13.0% Cash, Due 8/2022)^(L)
   23,100    23,100    23,100




      26,500    26,500
Telecommunications – 4.2%

B+T Group Acquisition, Inc.^(M) – Line of Credit, $0 available (L+11.0%, 13.0% Cash, Due 12/2021)^(G)(K)
   2,800    2,800    2,569
B+T Group Acquisition, Inc.^(M) – Term Debt (L+11.0%, 13.0% Cash, Due 12/2021)^(G)(K)
   14,000    14,000    12,845




      16,800    15,414




Total Secured First Lien Debt
      $ 190,831    $ 179,000


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)			Cost		Fair Value
Preferred Equity – 25.3%
Diversified/Conglomerate Services – 12.9%
Bassett Creek Services, Inc. – Preferred Stock^(C)(L)		4,900		$	4,900	$	7,643
Counsel Press, Inc. – Preferred Stock^(C)(L)		6,995			6,995		28,393
Horizon Facilities Services, Inc. – Preferred Stock^(C)(L)		10,080			10,080		10,080
Mason West, LLC – Preferred Stock^(C)(L)		11,206			11,206		10,946

					33,181		57,062
Healthcare, Education, and Childcare – 4.5%
Educators Resource, Inc. – Preferred Stock^(C)(L)		8,560			8,560		20,005

Home and Office Furnishings, Housewares, and Durable Consumer Products – 2.0%
Brunswick Bowling Products, Inc. – Preferred Stock^(C)(L)		6,653			6,653		4,512
Ginsey Home Solutions, Inc. – Preferred Stock^(C)(L)		19,280			9,583		4,245

					16,236		8,757
Hotels, Motels, Inns, and Gaming Total -1.7%
Nocturne Villa Rentals, Inc.- Preferred Stock ^(C)(L)		6,600			6,600		7,492

Leisure, Amusement, Motion Pictures, and Entertainment – 4.2 %
Schylling, Inc. – Preferred Stock^(C)(L)		4,000			4,000		18,458

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0%
SBS Industries Holdings, Inc. – Preferred Stock^(C)(L)		27,705			2,771		—

Total Preferred Equity				$	71,348	$	111,774

Common Equity/Equivalents – 1.6%

Aerospace and Defense -1.1%
Galaxy Technologies Holdings, Inc. – Common Stock^(C)(L)		16,957		$	11,513	$	4,760

Cargo Transport – 0.5%
Diligent Delivery Systems – Common Stock Warrants^(C)(L)		8	%		500		2,061

Diversified/Conglomerate Manufacturing – 0.0%
Phoenix Door Systems, Inc. – Common Stock^(C)(L)		3,195			1,452		—

Home and Office Furnishings, Housewares, and Durable Consumer Products – 0.0%
Ginsey Home Solutions, Inc. – Common Stock^(C)(L)		63,747			8		—

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0%
SBS Industries Holdings, Inc. – Common Stock^(C)(L)		221,500			222		—

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
Funko Acquisition Holdings, LLC^(M) – Common Units^(C)(S)		6,290			31		78

Total Common Equity/Equivalents				$	13,726	$	6,899

Total Non-Control/Non-Affiliate Investments				$	350,516	$	383,339

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2021

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)		Cost		Fair Value
AFFILIATE INVESTMENTS^(O) – 80.1%
Secured First Lien Debt – 52.9%
Chemicals, Plastics, and Rubber – 6.0%
PSI Molded Plastics, Inc. – Term Debt (L+5.5%, 7.0% Cash, Due 1/2024)^(L)	$	26,618	$	26,618	$	26,618

Diversified/Conglomerate Manufacturing – 1.9%
Edge Adhesives Holdings, Inc.^(M) – Term Debt (L+10.5%, 12.5% Cash, Due 2/2022)^(K)		8,310		8,310		8,310

Diversified/Conglomerate Services – 22.9%
ImageWorks Display and Marketing Group, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 11/2022)^(L)		22,000		22,000		22,000
J.R. Hobbs Co. - Atlanta, LLC - Term Debt (L+6.0%, 8.0% Cash, Due 10/2024)^(G)(K)		36,000		36,000		34,200
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+10.3%, 11.8% Cash, Due 10/2024)^(G)(K)		16,500		16,500		15,675
The Maids International, LLC – Term Debt (L+10.5%, 12.0% Cash, Due 3/2025)^(L)		28,560		28,560		28,560

				103,060		100,435
Home and Office Furnishings, Housewares, and Durable Consumer Products – 6.1%
Old World Christmas, Inc. – Secured First Lien Term Loan (L+9.5%, 11.0% Cash, Due 12/2025)^(L)		27,000		27,000		27,000

Leisure, Amusement, Motion Pictures, and Entertainment – 2.0%
SOG Specialty Knives & Tools, LLC – Term Debt (Due 12/2023)^(L)(R)		538		538		538
SOG Specialty Knives & Tools, LLC – Term Debt (L+4.0%, 6.0% Cash, Due 12/2023)^(L)		8,399		8,399		8,399

				8,937		8,937
Mining, Steel, Iron and Non-Precious Metals Total – 4.1%
Utah Pacific Bridge & Steel, Ltd., $2,000 available (L+8.5%, 10.0% Cash, Due 7/2022)^(L)		—		—		—
Utah Pacific Bridge & Steel, Ltd. (L+10.0%, 11.5% Cash, Due 7/2026)^(L)		18,250		18,250		18,250

				18,250		18,250
Personal and Non-Durable Consumer Products (Manufacturing Only) – 6.1%
The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 5/2022)^(G)(L)		3,400		3,400		3,400
The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 5/2022)^(G)(L)		500		500		500
Pioneer Square Brands, Inc. – Term Debt (L+12.0%, 13.0% Cash, Due 8/2022)^(L)		23,100		23,100		23,100

				27,000		27,000
Telecommunications – 3.8%
B+T Group Acquisition, Inc.^(M) – Line of Credit, $0 available (L+11.0%, 13.0% Cash, Due 12/2021)^(L)		2,800		2,800		2,800
B+T Group Acquisition, Inc.^(M) – Term Debt (L+11.0%, 13.0% Cash, Due 12/2021)^(L)		14,000		14,000		14,000

				16,800		16,800

Total Secured First Lien Debt			$	235,975	$	233,350

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2021

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)		Cost		Fair Value
Secured Second Lien Debt – 0.4%
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.4%
The Mountain Corporation – Term Debt (L+4.0%, 7.0% Cash, Due 4/2024)^(G)(L)	$	11,700	$	11,700	$	1,672
The Mountain Corporation – Delayed Draw Term Debt, $0 available (L+4.0%, 7.0% Cash, Due 4/2024)^(G)(L)		1,500		1,500		214

				13,200		1,886

Total Secured Second Lien Debt			$	13,200	$	1,886

Preferred Equity – 26.6%

Chemicals, Plastics, and Rubber – 0.0%
PSI Molded Plastics, Inc. – Preferred Stock^(C)(L)		158,598	$	19,730	$	—

Diversified/Conglomerate Manufacturing – 0.0%
Edge Adhesives Holdings, Inc.^(M) – Preferred Stock^(C)(L)		8,199		8,199		—

Diversified/Conglomerate Services – 4.4%
ImageWorks Display and Marketing Group, Inc. – Preferred Stock^(C)(L)		67,490		6,749		15,120
J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock^(C)(L)		10,920		10,920		—
The Maids International, LLC – Preferred Stock^(C)(L)		6,640		6,640		4,614

				24,309		19,734
Home and Office Furnishings, Housewares, and Durable Consumer Products – 7.5%
Old World Christmas, Inc. – Preferred Stock^(C)(L)		6,180		—		32,884

Leisure, Amusement, Motion Pictures, and Entertainment – 3.3%
SOG Specialty Knives & Tools, LLC – Preferred Stock^(C)(L)		14,949		14,949		14,335

Mining, Steel, Iron and Non-Precious Metals – 1.4%
Utah Pacific Bridge & Steel, Ltd. — Preferred Stock^(C)(L)		6,000		6,000		6,000

Personal and Non-Durable Consumer Products (Manufacturing Only) – 7.0%
The Mountain Corporation – Preferred Stock^(C)(L)		6,899		6,899		—
Pioneer Square Brands, Inc. – Preferred Stock^(C)(L)		5,502		5,500		30,925

				12,399		30,925
Telecommunications – 3.0%
B+T Group Acquisition, Inc.^(M) – Preferred Stock^(C)(L)		14,304		4,722		13,279

Total Preferred Equity			$	90,308	$	117,157

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2021

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)			Cost		Fair Value
Common Equity/Equivalents – 0.2%
Diversified/Conglomerate Services – 0.0%
Nth Degree Investment Group, LLC – Common Units^(C)(L)		14,360,000		$	1,219		—

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Common Stock^(C)(L)		751			1		—

Telecommunications – 0.2%
B+T Group Acquisition, Inc.^(M) – Common Stock Warrant^(C)(L)		3.5	%		—		771

Total Common Equity/Equivalents				$	1,220	$	771

Total Affiliate Investments				$	340,703	$	353,164

TOTAL INVESTMENTS – 167.2%				$	691,219	$	736,503

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

~~DECEMBER 31, 2020~~

~~(DOLLAR AMOUNTS IN THOUSANDS)~~

~~(UNAUDITED)~~

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J)    Cost    Fair
Value
Secured Second Lien Debt – 13.1%

Diversified/Conglomerate Services – 12.5%

J.R. Hobbs Co. – Atlanta, LLC – Line of Credit, $0 available (L+6.0%, 8.0% Cash, Due 10/2024)^(L)
   $ 10,000    $ 10,000    $ 10,000
J.R. Hobbs Co. – Atlanta, LLC – Term Debt (L+10.3%, 11.8% Cash, Due 10/2024)^(L)
   36,000    36,000    36,000




      46,000    46,000
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.6%

The Mountain Corporation – Term Debt (L+4.0%, 7.0% Cash, Due 4/2024)^(G)(L)
   11,700    11,700    2,349
The Mountain Corporation – Delayed Draw Term Debt, $1,000 available (L+4.0%, 7.0% Cash, Due 4/2024)^(G)(L)
   500    500    100




      12,200    2,449




Total Secured Second Lien Debt
      $ 58,200    $ 48,449




Preferred Equity – 16.8%

Beverage, Food, and Tobacco – 1.4%

Head Country, Inc. – Preferred Stock^(C)(L)
   4,000    $ 4,000    $ 5,258
Chemicals, Plastics, and Rubber – 0.0%

PSI Molded Plastics, Inc. – Preferred Stock^(C)(L)
   158,598    19,730    —
Diversified/Conglomerate Manufacturing – 0.0%

Channel Technologies Group, LLC – Preferred Stock^(C)(L)
   2,279    1,841    —
Edge Adhesives Holdings, Inc.^(M) – Preferred Stock^(C)(L)
   8,199    8,199    —




      10,040    —
Diversified/Conglomerate Services – 3.4%

ImageWorks Display and Marketing Group, Inc. – Preferred Stock^(C)(L)
   67,490    6,749    6,953
J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock^(C)(L)
   10,920    10,920    —
The Maids International, LLC – Preferred Stock^(C)(L)
   6,640    6,640    5,568




      24,309    12,521
Home and Office Furnishings, Housewares, and Durable Consumer Products – 3.6%

Old World Christmas, Inc. – Preferred Stock^(C)(L)
   6,180    —      13,445
Leisure, Amusement, Motion Pictures, and Entertainment – 1.2%

SOG Specialty Knives & Tools, LLC – Preferred Stock^(C)(L)
   14,949    14,949    4,354
Personal and Non-Durable Consumer Products (Manufacturing Only) – 7.2%

The Mountain Corporation – Preferred Stock^(C)(L)
   6,899    6,899    —
Pioneer Square Brands, Inc. – Preferred Stock^(C)(L)
   5,502    5,500    26,394




      12,399    26,394
Telecommunications – 0.0%

B+T Group Acquisition, Inc.^(M) – Preferred Stock^(C)(L)
   14,304    4,722    —




Total Preferred Equity
      $ 90,149    $ 61,972

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

~~GLADSTONE INVESTMENT CORPORATION~~

~~CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)~~

~~DECEMBER 31, 2020~~

~~(DOLLAR AMOUNTS IN THOUSANDS)~~

~~(UNAUDITED)~~

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J) Cost    Fair Value
Common Equity/Equivalents – 0.0%

Diversified/Conglomerate Manufacturing – 0.0%

Channel Technologies Group, LLC – Common Stock^(C)(L)
   2,319,184 $ —      $ —
D.P.M.S., Inc. – Common Stock^(C)(L)
   627 1    —




   1    —
Diversified/Conglomerate Services – 0.0%

Nth Degree Investment Group, LLC – Common Stock^(C)(L)
   14,360,000 1,219    —
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%

The Mountain Corporation – Common Stock^(C)(L)
   751 1    —
Telecommunications – 0.0%

B+T Group Acquisition, Inc.^(M) – Common Stock Warrant^(C)(L)
   3.5 % —      —




Total Common Equity/Equivalents
   $ 1,221    $ —








Total Affiliate Investments
   $ 340,401    $ 289,421




CONTROL INVESTMENTS^(P) – 8.6%:

Secured Second Lien Debt – 3.6%

Aerospace and Defense – 3.6%

Galaxy Technologies, Inc. – Line of Credit, $0 available (L+4.5%, 6.5% Cash (0.5% Unused Fee), Due 8/2023)^(L)
   $ 5,000 $ 5,000    $ 5,000
Galaxy Technologies, Inc. – Term Debt (L+6.0%, 10.0% Cash, Due 8/2023)^(L)
   8,000 8,000    8,000




   $ 13,000    $ 13,000




Preferred Equity – 5.0%

Aerospace and Defense – 5.0%

Galaxy Technologies, Inc. – Preferred Stock^(C)(L)
   5,517,444 $ 11,464    $ 18,331
Common Equity – 0.0%

Aerospace and Defense – 0.0%

Galaxy Technologies, Inc. – Common Stock^(C)(L)
   88,843 $ 48    $ —




Total Control Investments
   $ 24,512    $ 31,331




TOTAL INVESTMENTS – 165.9%
   $ 657,881    $ 610,888

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

~~GLADSTONE INVESTMENT CORPORATION~~

~~CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)~~

~~DECEMBER 31, 2020~~SEPTEMBER 30, 2021

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)

^(A)

Certain of the securities listed are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, totaling ~~$507.2~~$549.1 million at fair value, are pledged as collateral to our revolving line of credit, as described further in Note 5 — Borrowings in the accompanying Notes to Consolidated Financial Statements. Additionally, under Section 55 of the Investment Company Act of 1940, as amended (the “1940 Act”), we may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. As of ~~December 31, 2020,~~September 30, 2021, our investment in Funko Acquisition Holdings, LLC (“Funko”) was considered a non-qualifying asset under Section 55 of the 1940 Act and represented less than 0.1% of total investments, at fair value.

^(B)

Unless indicated otherwise, all cash interest rates are indexed to 30-day London Interbank Offered Rate (“LIBOR” or “L”), which was 0.1% as of ~~December 31, 2020.~~September 30, 2021. If applicable, paid-in-kind 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 30-day LIBOR plus a spread. Due dates represent the contractual maturity date.

^(C)	Security is non-income producing.

^(D)	Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of ~~December 31, 2020.~~September 30, 2021.

^(E)

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

^(F)

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.

^(G)	Debt security is on non-accrual status.

^(H)

$5.1 million of the debt security was participated to a third-party but is accounted for as collateral for a secured borrowing under accounting principles generally accepted in the U.S. and presented as Secured borrowing on our accompanying Consolidated Statements of Assets and Liabilities as of ~~December 31, 2020.~~September 30, 2021.

^(I)	~~Debt security has a fixed interest rate.~~Reserved.

^(J)	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.

^(K)	Fair value was based on internal yield analysis or on estimates of value submitted by ICE Data Pricing and Reference Data, LLC. Refer to Note 3 — Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

^(L)

Fair value was based on the total enterprise value of the portfolio company, which is generally allocated to the portfolio company’s securities in order of their relative priority in the capital structure. Refer to Note 3 — Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

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

^(N)	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.

^(O)	Affiliate investments, as defined by the 1940 Act, are those that are not Control investments and 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.

^(P)	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.

^(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)	Debt security does not have a stated current interest rate.

^(S)

Our investment in Funko was valued using Level 2 inputs within the ASC 820 fair value hierarchy. Our common units in Funko are convertible into 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 discount for lack of 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 to Consolidated Financial Statements for additional information.

^(T)	Refer to Note 10 — Commitments and Contingencies in the accompanying Notes to Consolidated Financial Statements for additional information regarding this guaranty.

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

MARCH 31, 2021

(DOLLAR AMOUNTS IN THOUSANDS)


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)		Cost		Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS^(N) – 77.9%
Secured First Lien Debt – 48.9%
Diversified/Conglomerate Manufacturing – 1.1%
Phoenix Door Systems, Inc. – Line of Credit, $0 available (L+7.0%, 9.0% Cash (0.3% Unused Fee), Due 3/2022)^(L)	$	1,150	$	1,150	$	1,150
Phoenix Door Systems, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 9/2024)^(L)		3,200		3,200		3,200

				4,350		4,350
Diversified/Conglomerate Services – 30.6%
Bassett Creek Services, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 4/2023)^(K)		37,500		37,500		36,656
Counsel Press, Inc. – Term Debt (L+11.8%, 12.8% Cash, Due 3/2023)^(L)		21,100		21,100		21,100
Counsel Press, Inc. – Term Debt (L+13.0%, 14.0% Cash, Due 3/2023)^(L)		6,400		6,400		6,400
Horizon Facilities Services, Inc. – Term Debt (L+9.5%, 12.0% Cash, Due 6/2024)^(G)(L)		27,700		27,700		27,700
Mason West, LLC – Line of Credit, $3,000 available (L+8.0%, 10.0% Cash, Due 7/2021)^(L)		—		—		—
Mason West, LLC – Term Debt (L+10.0%, 12.5% Cash, Due 7/2025)^(L)		25,250		25,250		25,250

				117,950		117,106
Healthcare, Education, and Childcare – 5.2%
Educators Resource, Inc. – Term Debt (L+10.5%, 13.0% Cash, Due 11/2023)^(L)		20,000		20,000		20,000

Home and Office Furnishings, Housewares, and Durable Consumer Products – 6.4%
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023)^(L)		17,700		17,700		17,700
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023)^(L)		6,850		6,850		6,850

				24,550		24,550
Leisure, Amusement, Motion Pictures, and Entertainment – 5.6%
Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 8/2024)^(L)		13,081		13,081		13,081
Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 8/2024)^(L)		8,500		8,500		8,500

				21,581		21,581

Total Secured First Lien Debt			$	188,431	$	187,587

Secured Second Lien Debt – 11.0%
Automobile – 1.0%
Country Club Enterprises, LLC – Term Debt (L+8.0%, 10.0% Cash, Due 2/2022)^(K)	$	4,000	$	4,000	$	3,890
Country Club Enterprises, LLC – Guaranty ($1,000)^(T)		—		—		—

				4,000		3,890
Cargo Transport – 3.4%
Diligent Delivery Systems – Term Debt (L+9.0%, 11.0% Cash, Due 11/2022)^(Q)		13,000		12,970		13,000

Home and Office Furnishings, Housewares, and Durable Consumer Products – 3.5%
Ginsey Home Solutions, Inc. – Term Debt (L+10.0%, 13.5% Cash, Due 1/2025)^(H)(L)		13,300		13,300		13,300

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 3.1%
SBS Industries Holdings, Inc. – Term Debt (L+7.0%, 9.0% Cash, Due 11/2024)^(L)		11,736		11,736		11,736

Total Secured Second Lien Debt			$	42,006	$	41,926

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

MARCH 31, 2021

(DOLLAR AMOUNTS IN THOUSANDS)


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)			Cost		Fair Value
Preferred Equity – 17.3%
Diversified/Conglomerate Services – 9.2%
Bassett Creek Services, Inc. – Preferred Stock^(C)(L)		4,900		$	4,900	$	—
Counsel Press, Inc. – Preferred Stock^(C)(L)		6,995			6,995		21,348
Horizon Facilities Services, Inc. – Preferred Stock^(C)(L)		10,080			10,080		3,663
Mason West, LLC – Preferred Stock^(C)(L)		11,206			11,206		9,774

					33,181		34,785
Healthcare, Education, and Childcare – 2.9%
Educators Resource, Inc. – Preferred Stock^(C)(L)		8,560			8,560		11,194

Home and Office Furnishings, Housewares, and Durable Consumer Products – 2.5%
Brunswick Bowling Products, Inc. – Preferred Stock^(C)(L)		6,653			6,653		1,015
Ginsey Home Solutions, Inc. – Preferred Stock^(C)(L)		19,280			9,583		8,550

					16,236		9,565
Leisure, Amusement, Motion Pictures, and Entertainment – 2.1%
Schylling, Inc. – Preferred Stock^(C)(L)		4,000			4,000		7,936

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.6%
SBS Industries Holdings, Inc. – Preferred Stock^(C)(L)		27,705			2,771		2,463

Total Preferred Equity				$	64,748	$	65,943

Common Equity/Equivalents – 0.7%
Cargo Transport – 0.6%
Diligent Delivery Systems – Common Stock Warrants^(C)(Q)		8	%	$	500	$	2,211

Diversified/Conglomerate Manufacturing – 0.1%
Phoenix Door Systems, Inc. – Common Stock^(C)(L)		3,195			1,452		460

Home and Office Furnishings, Housewares, and Durable Consumer Products – 0.0%
Ginsey Home Solutions, Inc. – Common Stock^(C)(L)		63,747			8		—

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0%
SBS Industries Holdings, Inc. – Common Stock^(C)(L)		221,500			222		—

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
Funko Acquisition Holdings, LLC^(M) – Common Units^(C)(S)		7,178			33		95

Total Common Equity/Equivalents				$	2,215	$	2,766

Total Non-Control/Non-Affiliate Investments				$	297,400	$	298,222

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

MARCH 31, ~~2020~~2021

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J)    Cost    Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS^(N) – 79.4%

Secured First Lien Debt – 46.8%

Containers, Packaging, and Glass – 2.6%

Frontier Packaging, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 3/2021)^(L)
   $ 9,500    $ 9,500    $ 9,500
Diversified/Conglomerate Manufacturing – 1.0%

Phoenix Door Systems, Inc – Line of Credit, $380 available (L+7.0%, 9.0% Cash (0.3% Unused Fee), Due 3/2021)^(L)
   370    370    370
Phoenix Door Systems, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 9/2024)^(L)
   3,200    3,200    3,200




      3,570    3,570
Diversified/Conglomerate Services – 24.1%

Bassett Creek Services, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 4/2023)^(L)
   37,500    37,500    37,500
Counsel Press, Inc. – Term Debt (L+11.8%, 12.8% Cash, Due 3/2023)^(L)
   18,000    18,000    18,000
Counsel Press, Inc. – Term Debt (L+13.0%, 14.0% Cash, Due 3/2023)^(L)
   5,500    5,500    5,500
Horizon Facilities Services, Inc. – Term Debt (L+9.5%, 12.0% Cash, Due 6/2024)^(L)
   27,700    27,700    27,700




      88,700    88,700
Healthcare, Education, and Childcare – 5.4%

Educators Resource, Inc. – Term Debt (L+10.5%, 13.0% Cash, Due 11/2023)^(L)
   20,000    20,000    20,000
Home and Office Furnishings, Housewares, and Durable Consumer Products – 4.8%

Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023)^(L)
   17,700    17,700    17,700
Leisure, Amusement, Motion Pictures, and Entertainment – 5.8%

Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 8/2024)^(L)
   13,081    13,081    13,081
Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 8/2024)^(L)
   8,500    8,500    8,500




      21,581    21,581
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 3.1%

SBS Industries Holdings, Inc. – Term Debt (L+12.0%, 14.0% Cash, Due 11/2024)^(L)
   11,355    11,355    11,355




Total Secured First Lien Debt
      $ 172,406    $ 172,406




Secured Second Lien Debt – 13.1%

Automobile – 1.0%

Country Club Enterprises, LLC – Term Debt (L+8.0%, 10.0% Cash, Due 2/2022)^(K)
   $ 4,000    $ 4,000    $ 3,600
Country Club Enterprises, LLC – Guaranty ($1,000)^(U)
   —      —      —




      4,000    3,600
Cargo Transport – 3.4%

Diligent Delivery Systems – Term Debt (L+9.0%, 11.0% Cash, Due 11/2022)^(K)
   13,000    12,951    12,545
Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.5%

Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023)^(L)
   6,850    6,850    6,850
Ginsey Home Solutions, Inc. – Term Debt (L+10.0%, 13.5% Cash, Due 1/2021)^(H)(L)
   13,300    13,300    13,300




      20,150    20,150
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 3.2%

SBS Industries Holdings, Inc. – Term Debt (L+12.0%, 14.0% Cash, Due 11/2024)^(L)
   11,736    11,736    11,736




Total Secured Second Lien Debt
      $ 48,837    $ 48,031


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)		Cost		Fair Value
AFFILIATE INVESTMENTS^(O) – 80.9%
Secured First Lien Debt – 47.6%
Beverage, Food, and Tobacco – 2.4%
Head Country, Inc. – Term Debt (L+10.5%, 12.5% Cash, Due 2/2023)^(L)	$	9,050	$	9,050	$	9,050

Chemicals, Plastics, and Rubber – 6.0%
PSI Molded Plastics, Inc. – Term Debt (L+5.5%, 7.0% Cash, Due 1/2024)^(L)		26,618		26,618		22,985

Diversified/Conglomerate Manufacturing – 5.4%
D.P.M.S., Inc. – Line of Credit, $0 available (L+6.5%, 9.0% Cash (0.5% Unused Fee), Due 10/2023)^(L)		1,500		1,500		1,500
D.P.M.S., Inc. – Term Debt (10.0% Cash, Due 10/2023)^(I)(L)		10,796		10,796		5,751
Edge Adhesives Holdings, Inc.^(M) – Line of Credit, $0 available (L+8.0%, 10.0% Cash, Due 9/2021)^(K)		1,020		1,020		1,005
Edge Adhesives Holdings, Inc.^(M) – Term Debt (L+10.5%, 12.5% Cash, Due 2/2022)^(K)		9,300		9,300		9,161
Edge Adhesives Holdings, Inc.^(M) – Term Debt (L+11.8%, 13.8% Cash, Due 2/2022)^(K)		3,000		3,000		2,955

				25,616		20,372
Diversified/Conglomerate Services – 13.3%
ImageWorks Display and Marketing Group, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 11/2022)^(L)		22,000		22,000		22,000
The Maids International, LLC – Term Debt (L+10.5%, 12.0% Cash, Due 3/2025)^(L)		28,560		28,560		28,560

				50,560		50,560
Home and Office Furnishings, Housewares, and Durable Consumer Products – 7.1%
Old World Christmas, Inc. – Secured First Lien Term Loan (L+9.5%, 11.0% Cash, Due 12/2025)^(L)		27,000		27,000		27,000

Leisure, Amusement, Motion Pictures, and Entertainment – 2.3%
SOG Specialty Knives & Tools, LLC – Term Debt (Due 12/2023)^(L)(R)		538		538		538
SOG Specialty Knives & Tools, LLC – Term Debt (L+4.0%, 6.0% Cash, Due 12/2023)^(L)		8,399		8,399		8,399

				8,937		8,937
Personal and Non-Durable Consumer Products (Manufacturing Only) – 7.0%
The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 4/2021)^(G)(L)		3,400		3,400		3,400
Pioneer Square Brands, Inc. – Term Debt (L+12.0%, 13.0% Cash, Due 8/2022)^(Q)		23,100		23,100		23,215

				26,500		26,615
Telecommunications – 4.1%
B+T Group Acquisition, Inc.^(M) – Line of Credit, $0 available (L+11.0%, 13.0% Cash, Due 12/2021)^(G)(K)		2,800		2,800		2,597
B+T Group Acquisition, Inc.^(M) – Term Debt (L+11.0%, 13.0% Cash, Due 12/2021)^(G)(K)		14,000		14,000		12,985

				16,800		15,582

Total Secured First Lien Debt			$	191,081	$	181,101

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

MARCH 31, ~~2020~~2021

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J) Cost    Fair Value
Preferred Equity – 16.5%

Containers, Packaging, and Glass – 0.4%

Frontier Packaging, Inc. – Preferred Stock^(C)(L)
   1,373 $ 1,373    $ 1.400
Diversified/Conglomerate Services – 6.3%

Bassett Creek Services, Inc. – Preferred Stock^(C)(L)
   4,900 4,900    —
Counsel Press, Inc. – Preferred Stock^(C)(L)
   6,995 6,995    20,593
Horizon Facilities Services, Inc. – Preferred Stock^(C)(L)
   10,080 10,080    2,699




   21,975    23,292
Healthcare, Education, and Childcare – 1.5%

Educators Resource, Inc. – Preferred Stock^(C)(L)
   8,560 8,560    5,563
Home and Office Furnishings, Housewares, and Durable Consumer Products – 7.1%

Brunswick Bowling Products, Inc. – Preferred Stock^(C)(L)
   4,943 4,943    19,848
Ginsey Home Solutions, Inc. – Preferred Stock^(C)(L)
   19,280 9,583    6,419




   14,526    26,267
Leisure, Amusement, Motion Pictures, and Entertainment – 1.2%

Schylling, Inc. – Preferred Stock^(C)(L)
   4,000 4,000    4,332
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0%

SBS Industries Holdings, Inc. – Preferred Stock^(C)(L)
   27,705 2,771    —




Total Preferred Equity
   $ 53,205    $ 60,854




Common Equity/Equivalents – 3.0%

Cargo Transport – 0.2%

Diligent Delivery Systems – Common Stock Warrants^(C)(L)
   8 % $ 500    $ 771
Containers, Packaging, and Glass – 2.6%

Frontier Packaging, Inc. – Common Stock^(C)(L)
   152 152    9,460
Diversified/Conglomerate Manufacturing– 0.2%

Phoenix Door Systems, Inc. – Common Stock^(C)(L)
   2,515 1,200    574
Home and Office Furnishings, Housewares, and Durable Consumer Products – 0.0%

Ginsey Home Solutions, Inc. – Common Stock^(C)(L)
   63,747 8    —
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0%

SBS Industries Holdings, Inc. – Common Stock^(C)(L)
   221,500 222    —
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%

Funko Acquisition Holdings, LLC^(M) – Common Units^(C)(S)
   12,180 59    33
Total Common Equity/Equivalents
   $ 2,141    $ 10,838




Total Non-Control/Non-Affiliate Investments
   $ 276,589    $ 292,129

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


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)		Cost		Fair Value
Secured Second Lien Debt – 12.6%
Diversified/Conglomerate Services – 12.0%
J.R. Hobbs Co. – Atlanta, LLC – Line of Credit, $0 available (L+6.0%, 8.0% Cash, Due 10/2024)^(K)	$	10,000	$	10,000	$	9,975
J.R. Hobbs Co. – Atlanta, LLC – Term Debt (L+10.3%, 11.8% Cash, Due 10/2024)^(K)		36,000		36,000		35,910

				46,000		45,885
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.6%
The Mountain Corporation – Term Debt (L+4.0%, 7.0% Cash, Due 4/2024)^(G)(L)		11,700		11,700		1,849
The Mountain Corporation – Delayed Draw Term Debt, $0 available (L+4.0%, 7.0% Cash, Due 4/2024)^(G)(L)		1,500		1,500		237

				13,200		2,086

Total Secured Second Lien Debt			$	59,200	$	47,971

Preferred Equity – 20.7%
Beverage, Food, and Tobacco – 1.7%
Head Country, Inc. – Preferred Stock^(C)(L)		4,000	$	4,000	$	6,469

Chemicals, Plastics, and Rubber – 0.0%
PSI Molded Plastics, Inc. – Preferred Stock^(C)(L)		158,598		19,730		—

Diversified/Conglomerate Manufacturing – 0.0%
Channel Technologies Group, LLC – Preferred Stock^(C)(L)		2,279		1,841		—
Edge Adhesives Holdings, Inc.^(M) – Preferred Stock^(C)(L)		8,199		8,199		—

				10,040		—
Diversified/Conglomerate Services – 3.5%
ImageWorks Display and Marketing Group, Inc. – Preferred Stock^(C)(L)		67,490		6,749		9,819
J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock^(C)(L)		10,920		10,920		—
The Maids International, LLC – Preferred Stock^(C)(L)		6,640		6,640		3,560

				24,309		13,379
Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.3%
Old World Christmas, Inc. – Preferred Stock^(C)(L)		6,180		—		20,248

Leisure, Amusement, Motion Pictures, and Entertainment – 1.8%
SOG Specialty Knives & Tools, LLC – Preferred Stock^(C)(L)		14,949		14,949		6,754

Personal and Non-Durable Consumer Products (Manufacturing Only) – 8.4%
The Mountain Corporation – Preferred Stock^(C)(L)		6,899		6,899		—
Pioneer Square Brands, Inc. – Preferred Stock^(C)(Q)		5,502		5,500		32,055

				12,399		32,055
Telecommunications – 0.0%
B+T Group Acquisition, Inc.^(M) – Preferred Stock^(C)(L)		14,304		4,722		—

Total Preferred Equity			$	90,149	$	78,905

~~GLADSTONE INVESTMENT CORPORATION~~

~~CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)~~

~~MARCH 31, 2020~~

~~(DOLLAR AMOUNTS IN THOUSANDS)~~

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J)    Cost    Fair Value
AFFILIATE INVESTMENTS^(O) – 67.0%

Secured First Lien Debt – 36.8%

Beverage, Food, and Tobacco – 2.5%

Head Country, Inc. – Term Debt (L+10.5%, 12.5% Cash, Due 2/2021)^(L)
   $ 9,050    $ 9,050    $ 9,050
Diversified/Conglomerate Manufacturing – 6.4%

D.P.M.S., Inc. – Line of Credit, $250 available (L+6.5%, 9.0% Cash (0.5% Unused Fee), Due 10/2021)^(L)
   1,250    1,250    1,250
D.P.M.S., Inc. – Term Debt (10.0% Cash, Due 10/2021)^(I)(L)
   10,796    10,796    10,796
Edge Adhesives Holdings, Inc.^(M) – Line of Credit, $600 available (L+8.0%, 10.0% Cash, Due 5/2020)^(K)
   420    420    395
Edge Adhesives Holdings, Inc.^(M) – Term Debt (L+10.5%, 12.5% Cash, Due 2/2022)^(K)
   9,300    9,300    8,742
Edge Adhesives Holdings, Inc.^(M) – Term Debt (L+11.8%, 13.8% Cash, Due 2/2022)^(K)
   3,000    3,000    2,820




      24,766    24,003
Diversified/Conglomerate Services – 14.0%

ImageWorks Display and Marketing Group, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 11/2022)^(L)
   22,000    22,000    22,000
The Maids International, LLC – Line of Credit, $0 available (L+7.5%, 9.5% Cash (0.3% Unused Fee), Due 3/2021)^(L)
   1,000    1,000    1,000
The Maids International, LLC – Term Debt (L+10.5%, 12.0% Cash, Due 3/2025)^(L)
   28,560    28,560    28,560




      51,560    51,560
Leisure, Amusement, Motion Pictures, and Entertainment – 2.4%

SOG Specialty Knives & Tools, LLC – Term Debt (Due 8/2020)^(L)(R)
   538    538    538
SOG Specialty Knives & Tools, LLC – Term Debt (L+4.0%, 6.0% Cash, Due 8/2022)^(G)(L)
   8,399    8,399    8,399




      8,937    8,937
Personal and Non-Durable Consumer Products (Manufacturing Only) – 7.2%

The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash,
Due 4/2021)^(L)
   3,400    3,400    3,400
Pioneer Square Brands, Inc. – Term Debt (L+12.0%, 13.0% Cash, Due 8/2022)^(L)
   23,100    23,100    23,100




      26,500    26,500
Telecommunications – 4.3%

B+T Group Acquisition, Inc.^(M) – Line of Credit, $0 available (L+11.0%, 13.0% Cash, Due 12/2021)^(G)(K)
   2,800    2,800    2,632
B+T Group Acquisition, Inc.^(M) – Term Debt (L+11.0%, 13.0% Cash, Due 12/2021)^(G)(K)
   14,000    14,000    13,160




      16,800    15,792




Total Secured First Lien Debt
      $ 137,613    $ 135,842

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

MARCH 31, ~~2020~~2021

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J)    Cost    Fair
Value
Secured Second Lien Debt – 17.7%

Chemicals, Plastics, and Rubber – 4.5%

PSI Molded Plastics, Inc. – Term Debt (L+12.0%, 13.5% Cash, Due 1/2024)^(G)(L)
   $ 26,618    $ 26,618    $ 16,737
Diversified/Conglomerate Services – 12.5%

J.R. Hobbs Co. – Atlanta, LLC – Line of Credit, $0 available (L+6.0%, 8.0% Cash, Due 10/2024)^(L)
   10,000    10,000    10,000
J.R. Hobbs Co. – Atlanta, LLC – Term Debt (L+10.3%, 11.8% Cash, Due 10/2024)^(L)
   36,000    36,000    36,000




      46,000    46,000
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.7%

The Mountain Corporation – Term Debt (L+4.0%, 7.0% Cash, Due 4/2024)^(G)(L)
   11,700    11,700    2,572




Total Secured Second Lien Debt
      $ 84,318    $ 65,309




Preferred Equity – 11.5%

Beverage, Food, and Tobacco – 0.9%

Head Country, Inc. – Preferred Stock^(C)(L)
   4,000    $ 4,000    $ 3,495
Chemicals, Plastics, and Rubber – 0.0%

PSI Molded Plastics, Inc. – Preferred Stock^(C)(L)
   78,598    11,730    —
Diversified/Conglomerate Manufacturing – 0.0%

Channel Technologies Group, LLC – Preferred Stock^(C)(L)
   2,279    1,841    —
Edge Adhesives Holdings, Inc.^(M) – Preferred Stock^(C)(L)
   8,199    8,199    —




      10,040    —
Diversified/Conglomerate Services – 3.6%

ImageWorks Display and Marketing Group, Inc. – Preferred Stock^(C)(L)
   67,490    6,749    8,265
J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock^(C)(L)
   10,920    10,920    —
The Maids International, LLC – Preferred Stock^(C)(L)
   6,640    6,640    5,339




      24,309    13,604
Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.3%

Old World Christmas, Inc. – Preferred Stock^(C)(L)
   6,180    6,180    19,588
Leisure, Amusement, Motion Pictures, and Entertainment – 0.1%

SOG Specialty Knives & Tools, LLC – Preferred Stock^(C)(L)
   14,949    14,949    390
Personal and Non-Durable Consumer Products (Manufacturing Only) – 1.6%

The Mountain Corporation – Preferred Stock^(C)(L)
   6,899    6,899    —
Pioneer Square Brands, Inc. – Preferred Stock^(C)(L)
   5,502    5,500    5,760




      12,399    5,760
Telecommunications – 0.0%

B+T Group Acquisition, Inc.^(M) – Preferred Stock^(C)(L)
   14,304    4,722    —




Total Preferred Equity
      $ 88,329    $ 42,837

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


Company and Investment^(A)(B)(D)(E)	Principal/Shares/ Units^(F)(J)			Cost		Fair Value
Common Equity/Equivalents – 0.0%
Diversified/Conglomerate Manufacturing – 0.0%
Channel Technologies Group, LLC – Common Stock^(C)(L)		2,319,184		$	—	$	—
D.P.M.S., Inc. – Common Stock^(C)(L)		627			1		—

					1		—
Diversified/Conglomerate Services – 0.0%
Nth Degree Investment Group, LLC – Common Units^(C)(L)		14,360,000			1,219		—

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Common Stock^(C)(L)		751			1		—

Telecommunications – 0.0%
B+T Group Acquisition, Inc.^(M) – Common Stock Warrant^(C)(L)		3.5	%		—		—

Total Common Equity/Equivalents				$	1,221	$	—

Total Affiliate Investments				$	341,651	$	307,977

CONTROL INVESTMENTS^(P) – 7.2%:
Secured Second Lien Debt – 3.4%
Aerospace and Defense – 3.4%
Galaxy Technologies, Inc. – Line of Credit, $0 available (L+4.5%, 6.5% Cash (0.5% Unused Fee), Due 8/2023)^(L)	$	5,000		$	5,000	$	5,000
Galaxy Technologies, Inc. – Term Debt (L+6.0%, 10.0% Cash, Due 8/2023)^(L)		8,000			8,000		8,000

				$	13,000	$	13,000

Preferred Equity – 3.8%
Aerospace and Defense – 3.8%
Galaxy Technologies, Inc. – Preferred Stock^(C)(L)		5,517,444		$	11,464	$	14,630
Common Equity – 0.0%
Aerospace and Defense – 0.0%
Galaxy Technologies, Inc. – Common Stock^(C)(L)		88,843		$	48	$	—

Total Control Investments				$	24,512	$	27,630

TOTAL INVESTMENTS – 166.0%				$	663,563	$	633,829

~~GLADSTONE INVESTMENT CORPORATION~~

~~CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)~~

~~MARCH 31, 2020~~

~~(DOLLAR AMOUNTS IN THOUSANDS)~~

Company and Investment^(A)(B)(D)(E)
   Principal/Shares/
Units^(F)(J) Cost    Fair Value
Common Equity/Equivalents – 1.0%

Diversified/Conglomerate Manufacturing – 0.0%

Channel Technologies Group, LLC – Common Stock^(C)(L)
   2,319,184 $ —      $ —
D.P.M.S., Inc. – Common Stock^(C)(L)
   627 1    —




   1    —
Diversified/Conglomerate Services – 1.0%

Nth Degree Investment Group, LLC – Common Stock^(C)(L)
   14,360,000 1,219    3,649
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%

The Mountain Corporation – Common Stock^(C)(L)
   751 1    —
Telecommunications – 0.0%

B+T Group Acquisition, Inc.^(M) – Common Stock Warrants^(C)(L)
   3.5 % —      —
Total Common Equity/Equivalents
   $ 1,221    $ 3,649




Total Affiliate Investments
   $ 311,481    $ 247,637




CONTROL INVESTMENTS^(P) – 7.2%:

Secured Second Lien Debt – 2.8%

Aerospace and Defense – 2.8%

Galaxy Tool Holding Corporation – Line of Credit, $0 available (L+4.5%, 6.5% Cash (1.0% Unused Fee), Due 8/2021)^(L)
   $ 5,000 $ 5,000    $ 5,000
Galaxy Tool Holding Corporation – Term Debt (L+6.0%, 10.0% Cash, Due 8/2021)^(L)
   5,000 5,000    5,000




   $ 10,000    $ 10,000




Preferred Equity – 4.4%

Aerospace and Defense – 4.4%

Galaxy Tool Holding Corporation – Preferred Stock^(C)(L)
   5,517,444 $ 11,464    $ 16,158
Common Equity – 0.0%

Aerospace and Defense – 0.0%

Galaxy Tool Holding Corporation – Common Stock^(C)(L)
   88,843 $ 48    $ —




Total Control Investments
   $ 21,512    $ 26,158




TOTAL INVESTMENTS – 153.6%^(V)
   $ 609,582    $ 565,924

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

MARCH 31, ~~2020~~2021

(DOLLAR AMOUNTS IN THOUSANDS)

^(A)

Certain of the securities listed are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, totaling ~~$496.4~~$524.0 million at fair value, are pledged as collateral to our revolving line of credit, as described further in Note 5—5 — Borrowings in the accompanying Notes to Consolidated Financial Statements. Additionally, under Section 55 of the 1940 Act, we may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. As of March 31, ~~2020,~~2021, our investment in Funko Acquisition Holdings, LLC (“Funko”) was considered a non-qualifying asset under Section 55 of the 1940 Act and represented less than 0.1% of total investments, at fair value.

^(B)

Unless indicated otherwise, all cash interest rates are indexed to 30-day LIBOR, which was ~~1.0%~~0.1% as of March 31, ~~2020.~~2021. If applicable, paid-in-kind 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 30-day LIBOR plus a spread. Due dates represent the contractual maturity date.

^(C)	Security is non-income producing.

^(D)	Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of March 31, ~~2020.~~2021.

^(E)	Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ASC 820 fair value hierarchy. Refer to Note 3—3 — Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

^(F)

^(G)	Debt security is on non-accrual status.

^(H)

$5.1 million of the debt security was participated to a third-party, but is accounted for as collateral for a secured borrowing under accounting principles generally accepted in the U.S. and presented as Secured borrowing on our accompanying Consolidated Statements of Assets and Liabilities as of March 31, ~~2020.~~2021.

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

^(J)	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.

^(K)	Fair value was based on internal yield analysis or on estimates of value submitted by ICE Data Pricing and Reference Data, LLC. Refer to Note 3—3 — Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

^(L)

Fair value was based on the total enterprise value of the portfolio company, which is generally allocated to the portfolio company’s securities in order of their relative priority in the capital structure. Refer to Note 3—3 — Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

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

^(N)	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.

^(O)	Affiliate investments, as defined by the 1940 Act, are those that are not Control investments and 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.

^(P)	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.

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

^(R)	Debt security does not have a stated current interest rate.

^(S)

Our investment in Funko was valued using Level 2 inputs within the ASC 820 fair value hierarchy. Our common units in Funko are convertible into 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 discount for lack of marketability. Funko, Inc. is traded on the Nasdaq Global Select Market under the trading symbol “FNKO.” Refer to Note 3—3 — Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

^(T)	~~Reserved.~~

^(U)	Refer to Note ~~10—~~10 — Commitments and Contingencies in the accompanying Notes to Consolidated Financial Statements for additional information regarding this guaranty.

^(U)

Reserved.

^(V)

Cumulative gross unrealized depreciation for federal income tax purposes is ~~$105.3~~$109.0 million; cumulative gross unrealized appreciation for federal income tax purposes is ~~$60.7~~$78.5 million. Cumulative net unrealized depreciation is ~~$44.6~~$30.5 million, based on a tax cost of ~~$610.5~~$664.3 million.

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

GLADSTONE INVESTMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER 31, 2020~~SEPTEMBER 30, 2021

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

(UNAUDITED)

NOTE 1. ORGANIZATION

Gladstone Investment Corporation (“Gladstone Investment”) was incorporated under the General Corporation Law of the State of Delaware on February 18, 2005, and completed an initial public offering on June 22, 2005. The terms “the Company,” “we,” “our” and “us” all refer to Gladstone Investment and its consolidated subsidiaries. We are an externally advised, 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 are applying the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment 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 in the United States (“U.S.”). Debt investments primarily take the form of two types of loans: secured first lien loans and secured second lien loans. Equity investments primarily take the form of preferred or common equity (or warrants or options to acquire the foregoing), often in connection with buyouts and other recapitalizations. Our investment objectives are to: (i) achieve and grow current income by investing in debt securities of established 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 (ii) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities of established businesses, generally in combination with the aforementioned debt securities, that we believe can grow over time to permit us to sell our equity investments for capital gains. We intend that our investment portfolio over time will consist of approximately 75.0% in debt investments and 25.0% in equity investments, at cost.

Gladstone Business Investment, LLC (“Business Investment”), a wholly-owned subsidiary of ours, was established on August 11, 2006 for the sole purpose of holding certain investments pledged as collateral under our line of credit. The financial statements of Business Investment are consolidated with those of Gladstone Investment. ~~We also have significant subsidiaries (as defined under Rule~~ ~~1-02(w)~~ ~~of the U.S. Securities and Exchange Commission’s (“SEC”) Regulation~~ ~~S-X)~~ ~~whose financial statements are not consolidated with ours.~~ Refer to Note 12 — Unconsolidated Significant Subsidiaries for additional information regarding our unconsolidated significant subsidiaries.

We are externally managed by Gladstone Management Corporation (the “Adviser”), an affiliate of ours and an ~~SEC-registered~~a U.S. Securities and Exchange Commission (“SEC”) registered investment adviser, pursuant to an investment advisory and management agreement (the “Advisory Agreement”). Administrative services are provided by Gladstone Administration, LLC (the “Administrator”), an affiliate of ours and the Adviser, pursuant to an administration agreement (the “Administration Agreement”). Refer to Note 4 — Related Party Transactions for more 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 on Form 10-Q and Articles 6, 10 and 12 of SEC Regulation S-X. Accordingly, we have not included in this quarterly report all of the information and notes required by GAAP for annual financial statements. The accompanying Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. In accordance with Article 6 of Regulation S-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 and ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 are not necessarily indicative of results that ultimately may be achieved for the fiscal year ending March 31, ~~2021~~2022 or any future interim period. 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 Form 10-K for the fiscal year ended March 31, ~~2020,~~2021, as filed with the SEC on May ~~12, 2020.~~

1911, 2021.

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 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 to Consolidated Financial Statements. Reclassifications did not impact net increase (decrease) in net assets resulting from operations, total assets, total liabilities or total net assets, or Consolidated Statements of Changes in Net Assets and Consolidated Statements of Cash Flows classifications.

Investment Valuation Policy

Accounting Recognition

We record our investments at fair value in accordance with the FASB ASC Topic 820, “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 the cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, and include investments charged off during the period, net of recoveries. Unrealized appreciation or depreciation primarily reflects the change in investment fair values, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Board Responsibility

In accordance with the 1940 Act, our board of directors (“Board of Directors”) has the ultimate responsibility for reviewing and 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 has been approved by our Board of Directors) (the “Policy”). Such review occurs in three phases. First, prior to its quarterly meetings, the Board of Directors receives written valuation recommendations and supporting materials provided by professionals of the Adviser and Administrator with oversight and direction from the chief valuation officer (the “Valuation Team”). Second, the Valuation Committee of our Board of Directors (comprised entirely of independent directors) meets to review the valuation recommendations and supporting materials, ~~presented~~discusses the information provided by the ~~chief valuation officer.~~Valuation Team, determines whether the Valuation Team has followed the Policy, determines whether the Valuation Team’s recommended fair value is reasonable in light of the Policy, and reviews other facts and circumstances. Third, after the Valuation Committee concludes its meeting, it and the chief valuation officer present the Valuation Committee’s findings to the entire Board of Directors so that the full Board of Directors may review and determine in good faith the fair value of such investments in accordance with the Policy.

There is no single 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 the chief valuation officer, uses the Policy, and each quarter the Valuation Committee and Board of Directors review the Policy to determine if changes thereto are advisable and 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.

ICE Data Pricing and Reference Data, LLC (“ICE”), a valuation specialist, generally provides estimates of fair value on our debt investments. The Valuation Team generally assigns 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 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 ICE’s. When this occurs, 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 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 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 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 and other relevant facts and circumstances 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 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 multiples obtained from our indexing methodology whereby the original transaction EBITDA multiple at the time of our closing is indexed to a general subset of comparable disclosed transactions and EBITDA multiples from recent sales to third parties of similar securities in similar industries; a comparison to publicly traded securities in similar industries; 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;~~EBITDA and EBITDA multiples; however, TEV may also be calculated using revenue and 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 a DCF analysis to calculate 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 for which we do not have the ability to effectuate a sale of the applicable portfolio company using the yield analysis, which includes a DCF calculation and assumptions that the Valuation Team believes market participants would use, including: 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 ICE and market quotes.

•

Market Quotes — For our investments for which a limited market exists, we generally base fair value on readily available and reliable market quotations, which are corroborated by the Valuation Team (generally by using the yield analysis ~~explained~~described above). In addition, the Valuation Team assesses trading activity for similar 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 in the bid-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 for which we cannot effectuate a sale of the fund, the Valuation Team generally determines the fair value 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 valuation techniques listed above, the Valuation Team may also consider other factors when determining the fair value of our investments, including: the nature and realizable value of the collateral, including external parties’ guaranties, any relevant offers or letters of intent to acquire the portfolio company, timing of expected loan repayments, and the markets in which the portfolio company operates.

Fair value measurements of our investments may involve subjective judgments and estimates and, due to the uncertainty inherent in valuing these securities, the determinations of fair value 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 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, adjusted for amortization of premiums, amendment fees and acquisition costs and the accretion of discounts, 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 on non-accrual status and cease recognizing interest income on that loan 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 on non-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, the interest income is deemed to be collectible. As of ~~December 31, 2020,~~September 30, 2021, our loans to ~~B+T Group Acquisition, Inc.~~J.R. Hobbs Co. – Atlanta, LLC (“~~B+T”), Horizon Facilities Services, Inc. (“Horizon”~~J.R. Hobbs”), The Mountain Corporation (“The Mountain”), ~~PSI Molded Plastics,~~and SBS Industries Holdings, Inc. ~~(“PSI Molded”) and SOG Specialty Knives & Tools, LLC (“SOG”)~~ were on non-accrual status, with an aggregate debt cost basis of ~~$95.1~~$81.3 million, or ~~19.5%~~15.8% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of ~~$78.3~~$66.7 million, or ~~16.8%~~13.3% of the fair value of all debt investments in our portfolio. As of March 31, ~~2020, certain of~~2021, our loans to B+T Group Acquisition, Inc., Horizon Facilities Services, Inc., and The Mountain ~~PSI Molded, and SOG~~ were on non-accrual status, with an aggregate debt cost basis of ~~$63.5~~$61.1 million, or ~~14.0%~~12.4% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of ~~$43.5~~$48.8 million, or ~~10.1%~~10.3% of the fair value of all debt investments in our portfolio.

Paid-in-kind (“PIK”) interest, computed at the contractual rate specified in the loan agreement, is added to the principal balance of the loan and recorded as interest income. As of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, we did not have any loans with a PIK interest component.

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, 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.

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 the Fifth Amended and Restated Credit Agreement dated April 30, 2013, as amended (the “Credit Facility”).

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.

Refer to Note 4 — Related Party Transactions for additional information regarding these related party fees and agreements.

Recent Accounting Pronouncements

In August ~~2018,~~2021, the FASB issued Accounting Standards Update ~~2018-13,~~2021-06, “~~Fair Value Measurement~~Presentation of Financial Statements (Topic ~~820)~~205): ~~Disclosure Framework—Changes to the Disclosure Requirements for Fair Value~~Financial Services – Depository and Lending (Topic 924), and Financial Services – Investment Companies (Topic 946)” (“ASU ~~2018-13”~~2021-06”), which modifies the disclosure requirements ~~in ASC 820.~~for acquired and disposed businesses. ASU ~~2018-13~~2021-06 was effective ~~for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted, and we adopted ASU~~ ~~2018-13~~ ~~effective April 1, 2020.~~upon issuance. The adoption of ASU ~~2018-13~~2021-06 did not have a material impact on our financial position, results of operations or cash flows.

NOTE 3. INVESTMENTS

Fair Value

In accordance with ASC 820, we determine the fair value of our investments to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date.

•

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical financial instruments in active markets;

•

Level 2 — inputs to the valuation methodology include quoted prices for similar financial instruments in active or inactive markets, and inputs that are observable for the financial instrument, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists, or instances where prices vary substantially over time or among brokered market makers; and

•

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are those inputs that reflect assumptions that market participants would use when pricing the financial instrument and can include the Valuation Team’s assumptions based upon the best available information.

When a determination is made to classify our investments within Level 3 of the valuation hierarchy, such determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable, or Level 3, inputs, observable inputs (or components that are actively quoted and can be validated to external sources). The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

As of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, 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.

We transfer investments in and out of Level 1, 2 and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. There were no transfers in or out of Level 1, 2 and 3 during the ~~nine~~six months ended ~~December 31,~~September 30, 2021 and 2020, ~~and 2019,~~ respectively.

As of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, 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, 2020:
As of September 30, 2021:
Secured first lien debt	$	361,872	$	—	$	—		$	361,872	$	431,413	$	—	$	—		$	431,413
Secured second lien debt		103,365		—		—			103,365		68,489		—		—			68,489
Preferred equity		142,559		—		—			142,559		228,931		—		—			228,931
Common equity/equivalents		3,092		—		85	^(A)		3,007		7,670		—		78	^(A)		7,592

Total Investments as of December 31, 2020	$	610,888	$	—	$	85		$	610,803
Total Investments as of September 30, 2021										$	736,503	$	—	$	78		$	736,425


			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 March 31, 2020:
As of March 31, 2021:
Secured first lien debt	$	308,248	$	—	$	—		$	308,248	$	368,688	$	—	$	—		$	368,688
Secured second lien debt		123,340		—		—			123,340		102,897		—		—			102,897
Preferred equity		119,849		—		—			119,849		159,478		—		—			159,478
Common equity/equivalents		14,487		—		33	^(A)		14,454		2,766		—		95	^(A)		2,671

Total Investments as of March 31, 2020	$	565,924	$	—	$	33		$	565,891
Total Investments as of March 31, 2021										$	633,829	$	—	$	95		$	633,734

^(A)

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 certain restrictions.

The following table presents our investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy, and carried at fair value as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:


	Total Recurring Fair Value Measurements Reported in *Consolidated Statements* *of Assets and Liabilities* Valued Using Level 3 Inputs				Total Recurring Fair Value Measurements Reported in *Consolidated Statements* *of Assets and Liabilities* Valued Using Level 3 Inputs
	December 31, 2020		March 31, 2020		September 30, 2021		March 31, 2021
Non-Control/Non-Affiliate Investments
Secured first lien debt	$	182,872	$	172,406	$	198,063	$	187,587
Secured second lien debt		41,916		48,031		66,603		41,926
Preferred equity		62,256		60,854		111,774		65,943
Common equity/equivalents^(A)		3,007		10,805		6,821		2,671

Total Non-Control/Non-Affiliate Investments		290,051		292,096		383,261		298,127
Affiliate Investments
Secured first lien debt		179,000		135,842		233,350		181,101
Secured second lien debt		48,449		65,309		1,886		47,971
Preferred equity		61,972		42,837		117,157		78,905
Common equity/equivalents		—		3,649		771		—

Total Affiliate Investments		289,421		247,637		353,164		307,977
Control Investments
Secured first lien debt		—		—		—		—
Secured second lien debt		13,000		10,000		—		13,000
Preferred equity		18,331		16,158		—		14,630
Common equity/equivalents		—		—		—		—

Total Control Investments		31,331		26,158		—		27,630

Total investments at fair value using Level 3 inputs	$	610,803	$	565,891	$	736,425	$	633,734

^(A)

Excludes our investment in Funko with a fair value of ~~$85~~$78 and ~~$33~~$95 as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, respectively, which was valued using Level 2 inputs.

In accordance with ASC 820, the following table provides quantitative information about our investments valued using Level 3 fair value measurements as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020.~~2021. The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements. The weighted-average calculations in the table below are based on the principal balances for all debt-related calculations and on the cost basis for all equity-related calculations for the particular input.

Quantitative Information about Level 3 Fair Value Measurements

Fair Value as of

Valuation
Technique/

Methodology

Range / Weighted-Average as of

Fair Value as of

Valuation
Technique/
Methodology

Unobservable
Input

Range / Weighted-Average as of

December 31,
2020

March 31,
2020

Unobservable Input

December 31, 2020

March 31, 2020

September 30,
2021

March 31,
2021

September 30, 2021

March 31, 2021

Secured first lien debt

297,363

280,499

TEV

EBITDA multiple

4.1x – 8.0x /
6.3x

4.2x – 8.1x /
6.2x

368,746

303,330

^(A)

��

TEV

EBITDA
multiple

4.2x – 8.4x / 7.0x

4.6x – 8.0x / 7.0x

EBITDA

$1,372 – $16,727 /

$7,038

$1,372 – $13,042 /

$5,894

EBITDA

$2,620 – $19,505 /

$7,800

$1,403 – $9,500 /

$5,746

Revenue multiple

0.6x – 0.7x / 0.7x

0.3x – 0.7x / 0.5x

Revenue
multiple

0.7x – 0.7x / 0.7x

0.6x – 0.7x / 0.6x

Revenue

$14,635 – $28,167 /
$24,438

$14,343 –$24,060 /
$18,141

Revenue

$14,147 – $14,147 /
$14,147

$14,474 – $30,537 /
$26,110

Discount Rate

21.0% – 21.0% /
21.0%

—

62,667

65,358

Yield Analysis

Discount Rate

10.0% – 13.8% /

12.6%

13.3% – 17.9% /
14.7%

64,509

27,749

Yield Analysis

Discount Rate

13.9% – 21.7% /
14.4%

16.2% – 18.7% /
16.8%

Secured second lien debt^(A)

99,485

107,195

TEV

EBITDA multiple

5.1x – 6.3x /
5.4x

5.1x – 6.2x /
5.6x

Secured second lien debt

40,481

53,122

^(B)

TEV

EBITDA
multiple

6.7x – 6.8x / 6.8x

5.9x – 6.6x / 6.2x

EBITDA

$5,041 – $10,000 /
$7,848

$4,459 – $13,042 /
$7,444

EBITDA

$3,913 – $5,813 /
$5,158

$4,551 – $5,100 /
$4,772

Revenue multiple

0.7x – 0.7x /
0.7x

Revenue
multiple

0.7x – 0.7x / 0.7x

Revenue

$14,635 – $14,635 /
$14,635

$15,267 – $15,267 /
$15,267

Revenue

$14,147 – $14,147
/ $14,147

$14,474 – $14,474 /
$14,474

3,880

16,145

Yield Analysis

Discount Rate

13.0% – 13.0% /
13.0%

12.6% – 16.4% /
13.5%

28,008

49,775

Yield Analysis

Discount Rate

10.9% – 13.1% /
11.4%

8.1% – 13.5% /
11.2%

Preferred equity

142,559

119,849

TEV

EBITDA multiple

4.5x – 8.0x /
6.1x

5.1x – 8.1x /
6.1x

228,931

159,478

^(C)

TEV

EBITDA
multiple

4.2x – 8.4x / 6.8x

5.6x – 8.0x / 6.6x

EBITDA

$1,363 – $16,727 /
$6,332

$356 – $13,042 /
$5,596

EBITDA

$1,711 – $19,505 /
$6,359

$2,587 – $9,720 /
$5,938

Revenue multiple

0.6x – 0.7x / 0.7x

0.6x – 0.7x / 0.6x

Revenue
multiple

0.7x – 0.7x / 0.7x

0.6x – 0.7x / 0.6x

Revenue

$14,635 – $28,167 /
$23,894

$15,267 – $24,060 /
$21,283

Revenue

$14,147 – $14,147 /
$14,147

$14,474 – $30,537 /
$25,465

Discount Rate

21.0% – 21.0% / 21.0%

—

Common equity/equivalents^{(B) (C)}

3,007

14,454

TEV

EBITDA multiple

4.1x – 6.7x / 5.5x

4.2x – 7.4x / 5.9x

Common equity/equivalents^(E)

7,592

2,671

^(D)

TEV

EBITDA
multiple

4.9x – 8.5x / 6.7x

4.6x – 7.1x / 5.7x

EBITDA

$1,372 – $8,498 /
$4,985

$1,372 – $16,061 /
$9,258

EBITDA

$871 – $13,237 /
$5,835

$1,403 – $7,135 /
$4,132

Revenue multiple

0.7x – 0.7x / 0.7x

Revenue
multiple

0.7x – 0.7x / 0.7x

Revenue

$14,635 – $14,635 /
$14,635

$15,267 – $15,267 /
$15,267

Revenue

$14,147 – $14,147 /
$14,147

$14,474 – $14,474 /
$14,474

Total

610,803

565,891

736,425

633,734

^(A)	Fair value as of ~~December~~March 31, ~~2020~~2021 includes one proprietary debt investment with a fair value of $23.2 million, which was valued at the expected payoff amount as the unobservable input.

^(B)	Fair value as of March 31, 2021 includes one proprietary debt investment with a fair value of $13.0 million, which was valued at the expected payoff amount as the unobservable input.

^(B)(C)

Fair value as of ~~December~~March 31, ~~2020~~2021 includes one proprietary equity investment with a fair value of ~~$2.7~~$32.1 million, which was valued at the expected ~~payoff~~exit amount as the unobservable input.

^(C)(D)

Fair value as of March 31, 2021 includes one proprietary equity investment with a fair value of $2.2 million, which was valued at the expected exit amount as the unobservable input.

^(E)	Fair value as of both ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020~~2021 excludes our investment in Funko with a fair value of ~~$85~~$78 and ~~$33,~~$95, respectively, which was valued using Level 2 inputs.

Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in discount rates, EBITDA or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of our investments. Generally, an increase/(decrease) in discount rates or a (decrease)/increase in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a (decrease)/increase in the fair value of certain of our investments.

Changes in Level 3 Fair Value Measurements of Investments

The following tables provide our portfolio’s changes in fair value, broken out by security type, during the three and ~~nine~~six months ended ~~December 31,~~September 30, 2021 and 2020 ~~and 2019~~ for all investments for which the Adviser determines fair value using unobservable (Level 3) inputs.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)


	Secured First Lien Debt			Secured Second Lien Debt		Preferred Equity			Common Equity/ Equivalents			Total			Secured First Lien Debt			Secured Second Lien Debt		Preferred Equity			Common Equity/ Equivalents			Total
Three Months ended December 31, 2020:
Fair value as of September 30, 2020	$	356,496		$	100,076	$	140,076		$	12,266		$	608,914
Three Months ended September 30, 2021:
Fair value as of June 30, 2021															$	416,973		$	57,044	$	202,465		$	2,021		$	678,503
Total gain (loss):
Net realized gain (loss)^(A)		(8,470	)		—		3,292			14,030			8,852			—			—		—			—			—
Net unrealized appreciation (depreciation)^(B)		(700	)		84		9,680			2,678			11,742			(2,618	)		4,098		36,500			(10,463	)		27,517
Reversal of previously recorded (appreciation) depreciation upon realization^(B)		—			—		(84	)		(11,785	)		(11,869	)		—			—		—			—			—
New investments, repayments and settlements^(C):
Issuances / originations		27,280			3,205		1,709			—			32,194			24,400			5		6,000						30,405
Settlements / repayments		(12,734	)		—		—			—			(12,734	)		—			—		—			—			—
Sales		—			—		(12,114	)		(14,182	)		(26,296	)		—			—		—			—			—
Transfers^(D)		—			—		—			—			—			(7,342	)		7,342		(16,034	)		16,034			—

Fair value as of December 31, 2020	$	361,872		$	103,365	$	142,559		$	3,007		$	610,803
Fair value as of September 30, 2021															$	431,413		$	68,489	$	228,931		$	7,592		$	736,425


	Secured First Lien Debt			Secured Second Lien Debt			Preferred Equity			Common Equity/ Equivalents			Total			Secured First Lien Debt			Secured Second Lien Debt			Preferred Equity			Common Equity/ Equivalents			Total
Nine Months ended December 31, 2020:
Fair value as of March 31, 2020	$	308,248		$	123,340		$	119,849		$	14,454		$	565,891
Six Months ended September 30, 2021:
Fair value as of March 31, 2021																$	368,688		$	102,897		$	159,478		$	2,671		$	633,734
Total gain (loss):
Net realized gain (loss)^(A)		(8,470	)		—			3,292			14,144			8,966			—			—			1,786			—			1,786
Net unrealized appreciation (depreciation)^(B)		(1,915	)		474			9,432			490			8,481			3,232			4,126			79,356			(11,113	)		75,601
Reversal of previously recorded (appreciation) depreciation upon realization^(B)		—			—			(84	)		(11,785	)		(11,869	)		60			—			(629	)		—			(569	)
New investments, repayments and settlements^(C):
Issuances / originations		60,779			3,515			25,290			—			89,584			28,450			6,509			12,600			—			47,559
Settlements / repayments		(20,734	)		—			—			—			(20,734	)		(14,060	)		—			—			—			(14,060	)
Sales		—			—			(15,220	)		(14,296	)		(29,516	)		—			—	��		(7,626	)		—			(7,626	)
Transfers^(D)		23,964			(23,964	)		—			—			—			45,043			(45,043	)		(16,034	)		16,034			—

Fair value as of December 31, 2020	$	361,872		$	103,365		$	142,559		$	3,007		$	610,803
Fair value as of September 30, 2021																$	431,413		$	68,489		$	228,931		$	7,592		$	736,425

   Secured
First Lien
Debt Secured
Second
Lien Debt Preferred
Equity Common
Equity/
Equivalents Total
Three Months ended December 31, 2019:

Fair value as of September 30, 2019
   $ 300,864 $ 106,744 $ 183,531 $ 17,027 $ 608,166
Total gain (loss):

Net realized gain (loss)^(A)
   —   —   33,710 (300 ) 33,410
Net unrealized appreciation (depreciation)^(B)
   (395 ) (2,994 ) 4,621 (2,056 ) (824 )
Reversal of previously recorded (appreciation) depreciation upon realization^(B)
   —   —   (26,447 ) 300 (26,147 )
New investments, repayments and settlements^(C):

Issuances / originations
   2,215 19,988 1,726 —   23,929
Settlements / repayments
   (15,290 ) (10,000 ) —   —   (25,290 )
Sales
   —   —   (52,550 ) —   (52,550 )
Transfers^(D)
   (8,602 ) 8,602 (12,434 ) 12,434 —


Fair value as of December 31, 2019
   $ 278,792 $ 122,340 $ 132,157 $ 27,405 $ 560,694


	Secured First Lien Debt			Secured Second Lien Debt			Preferred Equity			Common Equity/ Equivalents			Total
Three Months ended September 30, 2020:
Fair value as of June 30, 2020	$	312,628		$	116,134		$	122,237		$	10,295		$	561,294
Total gain (loss):
Net realized gain (loss)^(A)		—			—			—			114			114
Net unrealized appreciation (depreciation)^(B)		1,355			951			(2,636	)		1,971			1,641
Reversal of previously recorded (appreciation) depreciation upon realization^(B)		—			—			—			—			—
New investments, repayments and settlements^(C):
Issuances / originations		33,399			105			23,581			—			57,085
Settlements / repayments		(8,000	)		—			—			—			(8,000	)
Sales		—			—			(3,106	)		(114	)		(3,220	)
Transfers^(D)		17,114			(17,114	)		—			—			—

Fair value as of September 30, 2020	$	356,496		$	100,076		$	140,076		$	12,266		$	608,914


	Secured First Lien Debt			Secured Second Lien Debt			Preferred Equity			Common Equity/ Equivalents			Total			Secured First Lien Debt			Secured Second Lien Debt			Preferred Equity			Common Equity/ Equivalents			Total
Nine Months ended December 31, 2019:
Fair value as of March 31, 2019	$	331,090		$	75,293		$	195,377		$	22,011		$	623,771
Six Months ended September 30, 2020:
Fair value as of March 31, 2020																$	308,248		$	123,340		$	119,849		$	14,454		$	565,891
Total gain (loss):
Net realized gain (loss)^(A)		—			—			35,243			18,995			54,238			—			—			—			114			114
Net unrealized appreciation (depreciation)^(B)		(2,095	)		(4,319	)		(4,746	)		4,395			(6,765	)		(1,215	)		390			(248	)		(2,188	)		(3,261	)
Reversal of previously recorded (appreciation) depreciation upon realization^(B)		—			67			(28,568	)		(11,448	)		(39,949	)		—			—			—			—			—
New investments, repayments and settlements^(C):
Issuances / originations		55,315			24,997			13,806			1,200			95,318			33,499			310			23,581			—			57,390
Settlements / repayments		(55,916	)		(23,300	)		—			—			(79,216	)		(8,000	)		—			—			—			(8,000	)
Sales		—			—			(66,521	)		(20,182	)		(86,703	)		—			—			(3,106	)		(114	)		(3,220	)
Transfers^(D)		(49,602	)		49,602			(12,434	)		12,434			—			23,964			(23,964	)		—			—			—

Fair value as of December 31, 2019	$	278,792		$	122,340		$	132,157		$	27,405		$	560,694
Fair value as of September 30, 2020																$	356,496		$	100,076		$	140,076		$	12,266		$	608,914

^(A)	Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective periods ended ~~December 31, 2020~~September 30, 2021 and ~~2019.~~2020.

^(B)	Included in net unrealized appreciation (depreciation) of investments on our accompanying Consolidated Statements of Operations for the respective periods ended ~~December 31, 2020~~September 30, 2021 and ~~2019.~~2020.

^(C)

Includes increases in the cost basis of investments resulting from new portfolio investments, the amortization of discounts, PIK and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs, and other cost-basis adjustments.

^(D)

~~2020:~~2021: Transfers represent (1) secured second lien debt of ~~Brunswick Bowling Products, Inc.~~J.R. Hobbs Co. – Atlanta, LLC with a total cost basis and fair value of ~~$6.9~~$52.5 million and $52.4 million, respectively, which was converted into secured first lien debt during the three months ended June 30, ~~2020 and~~2021, (2) secured ~~second~~first lien debt of ~~PSI Molded,~~D.P.M.S., Inc. with a total cost basis and fair value of ~~$26.6~~$12.3 million and ~~$17.1~~$7.3 million, respectively, which was converted into secured ~~first~~second lien debt of Galaxy Technologies Holdings, Inc. (“Galaxy Technologies Holdings”) during the three months ended September 30, ~~2020.~~2021 and (3) preferred equity of Galaxy Technologies, Inc. with a total cost basis and fair value of $11.5 million and $16.0 million, respectively, which was converted into common equity of Galaxy Technologies Holdings during the three months ended September 30, 2021.

~~2019:~~2020: Transfers represent (1) secured ~~first~~second lien debt of ~~B-Dry,~~ LLC with a cost basis of $11.9 million and a fair value of $0, which was converted into equity during the three months ended June 30, 2019, (2) secured first lien debt of J.R. Hobbs Co. – Atlanta, LLC,Brunswick Bowling Products, Inc. with a total cost basis and fair value of ~~$41.0~~$6.9 million, which was converted into secured ~~second~~first lien debt during the three months ended ~~September~~June 30, ~~2019, (3)~~2020 and (2) secured ~~first~~second lien debt of ~~SBS Investment Holdings,~~PSI Molded Plastics, Inc., with a total cost basis and fair value of ~~$8.6~~$26.6 million ~~that~~and $17.1 million, respectively, which was converted tointo secured ~~second~~first lien debt during the three months ended December 31, 2019 and (4) preferred equity of Nth Degree, Inc. with a cost basis of $1.2 million and fair value of $12.4 million, that was converted to common equity in Nth Degree Investment Group, LLC during the three months ended December 31, 2019.September 30, 2020.

Investment Activity

During the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, the following significant transactions occurred:

In ~~July 2020,~~May 2021, we dissolved our investment in Channel Technologies Group, LLC and recorded a realized loss of $1.8 million.

In June 2021, we invested ~~$46.9~~$10.0 million in ~~Mason West, LLC~~Nocturne Villa Rentals, Inc. (“~~Mason West”~~Nocturne”) through a combination of secured first lien debt and preferred equity. ~~Mason West,~~Nocturne, headquartered in ~~Placentia, California,~~Telluride, Colorado, is a provider of engineered seismic restraint and vibration isolation solutions. In September 2020, Mason West repaid $7.0 million of secured first lien debt and redeemed $3.1 million of preferred equity.luxury vacation rental manager.

In ~~September 2020,~~June 2021, we invested an additional ~~$8.0~~$6.5 million in ~~PSI Molded in the form of preferred equity and also amended certain terms of our existing debt.~~

In December 2020, we recapitalized our investment in Old World Christmas, Inc. (“Old World”) and invested an additional $27.0 million in the form of secured first lien debt. In connection with this investment, Old World paid dividend income of $3.2 million and additional equity proceeds of $10.8 million, resulting in a $7.5 million return of preferred equity cost basis and a realized gain of $3.3 million.

~~In December 2020, we invested an additional $3.0 million in Galaxy Technologies, Inc. (“Galaxy”)~~J.R. Hobbs in the form of secured second lien debt. In connection with ~~this~~the investment, ~~Galaxy purchased SBS Industries, LLC (a subsidiary of SBS Industries Holdings, Inc., one of~~ our ~~other portfolio companies). SBS Industries Holdings, Inc. used proceeds from the sale~~secured second lien debt was converted to ~~partially repay our $11.4 million~~secured first lien ~~debt, resulting in a realized loss of $8.5 million.~~debt.

In ~~December 2020,~~June 2021, we sold our investment in ~~Frontier Packaging,~~Head Country, Inc. (“Head Country”), which resulted in ~~dividend income of $0.9 million,~~ success fee income of ~~$0.2~~$2.0 million and a realized gain of ~~$14.0~~$3.6 million. In connection with the sale, we received net cash proceeds of ~~$26.0~~$16.7 million, including the repayment of our debt investment of ~~$9.5~~$9.1 million at par.

28In July 2021, we invested an additional $5.9 million in the form of secured first lien debt into Nocturne.

In July 2021, we invested $24.3 million in Utah Pacific Bridge & Steel, Ltd. (“Utah Pacific”) through a combination of secured first lien debt and preferred equity. Utah Pacific, headquartered in Lindon, Utah, is a manufacturer of large steel components used in bridge replacement, rehabilitation, and construction.

In September 2021, one of our portfolio companies, D.P.M.S., Inc. (“Danco”), merged with another of our portfolio companies, Galaxy Technologies, Inc. (“Galaxy”), into a newly formed portfolio company, Galaxy Technologies Holdings, Inc. (“Galaxy Technologies Holdings”). Our debt investments in Danco, which totaled $12.3 million at principal and cost, and Galaxy, which totaled $13.0 million at principal and cost, were converted into two second lien term loans with an aggregate cost and principal of $25.3 million to Galaxy Technologies Holdings. Our common equity investment in Danco, with a cost basis of $0.0 million, and our preferred and common equity investments in Galaxy, with an aggregate cost basis of $11.5 million, were converted into a common equity investment in Galaxy Technologies Holdings with a combined cost basis of $11.5 million.

Investment Concentrations

As of ~~December 31, 2020,~~September 30, 2021, our investment portfolio consisted of investments in 2827 portfolio companies located in 1719 states across 1314 different industries with an aggregate fair value of ~~$610.9~~$736.5 million. Our investments in Old World Christmas, Inc., Counsel Press, Inc., Pioneer Square Brands Inc., J.R. Hobbs, ~~Co. – Atlanta, LLC, Counsel Press,~~and Bassett Creek Services, Inc.~~, Old World, and Mason West~~ represented our five largest portfolio investments at fair value ~~as of December 31, 2020,~~ and collectively comprised ~~$214.8~~$264.8 million, or ~~35.1%~~35.9%, of our total investment portfolio at fair ~~value.~~value as of September 30, 2021.

The following table summarizes our investments by security type as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020:~~2021:


	December 31, 2020								March 31, 2020								September 30, 2021								March 31, 2021
	Cost				Fair Value				Cost				Fair Value				Cost				Fair Value				Cost				Fair Value
Secured first lien debt	$	375,062	57.0	%	$	361,872	59.2	%	$	310,019	50.9	%	$	308,248	54.5	%	$	434,106	62.8	%	$	431,413	58.6	%	$	379,512	57.2	%	$	368,688	58.2	%
Secured second lien debt		113,201	17.2			103,365	16.9			143,155	23.5			123,340	21.8			80,511	11.6			68,489	9.3			114,206	17.2			102,897	16.2

Total debt		488,263	74.2			465,237	76.1			453,174	74.4			431,588	76.3			514,617	74.4			499,902	67.9			493,718	74.4			471,585	74.4
Preferred equity		166,361	25.3			142,559	23.3			152,998	25.1			119,849	21.2			161,656	23.4			228,931	31.1			166,361	25.1			159,478	25.2
Common equity/equivalents		3,257	0.5			3,092	0.6			3,410	0.5			14,487	2.5			14,946	2.2			7,670	1.0			3,484	0.5			2,766	0.4

Total equity/equivalents		169,618	25.8			145,651	23.9			156,408	25.6			134,336	23.7			176,602	25.6			236,601	32.1			169,845	25.6			162,244	25.6

Total investments	$	657,881	100.0	%	$	610,888	100.0	%	$	609,582	100.0	%	$	565,924	100.0	%	$	691,219	100.0	%	$	736,503	100.0	%	$	663,563	100.0	%	$	633,829	100.0	%

Investments at fair value consisted of the following industry classifications as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020:~~2021:


	December 31, 2020					March 31, 2020					September 30, 2021					March 31, 2021
	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 Services	$	253,969		41.6	%	$	226,805		40.1	%	$	295,181		40.1	%	$	261,714		41.3	%
Home and Office Furnishings, Housewares, and Durable Consumer Products		92,374		15.1			83,705		14.8			106,491		14.6			94,663		15.0
Leisure, Amusement, Motion Pictures, and Entertainment												63,311		8.6			45,209		7.1
Personal and Non-Durable Consumer Products (Manufacturing Only)		55,429		9.1			34,865		6.2			59,889		8.1			60,852		9.6
Leisure, Amusement, Motion Pictures, and Entertainment		40,274		6.6			35,240		6.2
Healthcare, Education, and Childcare												40,005		5.4			31,194		4.9
Telecommunications												30,850		4.2			15,582		2.5
Aerospace and Defense		31,331		5.1			26,158		4.6			30,056		4.1			27,630		4.4
Healthcare, Education, and Childcare		28,898		4.7			25,563		4.5
Chemicals, Plastics, and Rubber												26,618		3.6			22,985		3.6
Mining, Steel, Iron and Non-Precious Metals												24,250		3.3			—		—
Hotels, Motels, Inns, and Gaming												16,992		2.3			—		—
Cargo Transport												15,076		2.0			15,211		2.4
Diversified/Conglomerate Manufacturing		24,976		4.1			28,147		5.0			12,792		1.7			25,181		4.0
Chemicals, Plastics, and Rubber		20,981		3.4			16,737		3.0
Cargo Transport		15,738		2.6			13,316		2.4
Telecommunications		15,414		2.5			15,792		2.8
Machinery (Non-agriculture, Non-construction, and Non-electronic)												11,032		1.5			14,199		2.2
Beverage, Food, and Tobacco		14,308		2.3			12,545		2.2			—		—			15,519		2.4
Machinery (Non-agriculture, Non-construction, and Non-electronic)		13,316		2.2			23,091		4.1
Containers, Packaging, and Glass		—		—			20,360		3.6
Other < 2.0%		3,880		0.7			3,600		0.5			3,960		0.5			3,890		0.6

Total investments	$	610,888		100.0	%	$	565,924		100.0	%	$	736,503		100.0	%	$	633,829		100.0	%

Investments at fair value were included in the following geographic regions of the U.S. as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020:~~2021:


	December 31, 2020					March 31, 2020					September 30, 2021					March 31, 2021
Location	Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments
West												214,697		29.2	%		160,581		25.3	%
South	$	175,580		28.7	%	$	182,178		32.2	%		192,267		26.1			182,529		28.8
Northeast		153,700		25.2			146,434		25.9			187,621		25.5			163,938		25.9
West		147,530		24.2			90,214		15.9
Midwest		134,078		21.9			147,098		26.0			141,918		19.2			126,781		20.0

Total investments	$	610,888		100.0	%	$	565,924		100.0	%	$	736,503		100.0	%	$	633,829		100.0	%

The geographic region indicates the location of the headquarters for our portfolio companies. A portfolio company may have additional business 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, 2020:~~September 30, 2021:


		Amount				Amount
For the remaining three months ending March 31:	2021	$	9,050
For the remaining six months ending March 31:					2022	$	30,460
For the fiscal years ending March 31:	2022		39,720		2023		114,850
	2023		106,150		2024		93,055
	2024		116,851		2025		171,777
	2025		164,277		2026		52,250
	Thereafter		52,250		Thereafter		52,246

	Total contractual repayments	$	488,298		Total contractual repayments	$	514,638
	Adjustments to cost basis of debt investments		(35	)	Adjustments to cost basis of debt investments		(21	)
	Investments in equity securities		169,618		Investments in equity securities		176,602

	Total cost basis of investments held as of December 31, 2020:	$	657,881		Total cost basis of investments held as of September 30, 2021:	$	691,219

Receivables from Portfolio Companies

Receivables from portfolio companies represent non-recurring costs that we incurred on behalf of portfolio companies. Such receivables, net of any allowance for uncollectible receivables, are included in Other assets, net on our accompanying Consolidated Statements of Assets and Liabilities. We generally maintain an allowance for uncollectible receivables from portfolio companies when the receivable balance becomes 90 days or more past due or if it is determined, based upon management’s judgment, that the portfolio company is unable to pay its obligations. We write-off accounts receivable when we have exhausted collection efforts and have deemed the receivables uncollectible. As of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, we had gross receivables from portfolio companies of ~~$1.3~~$1.8 million and ~~$1.4~~$1.5 million, respectively. As of ~~each of December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, the allowance for uncollectible receivables was $1.1 million and $0.9 ~~million.~~million, respectively.

NOTE 4. RELATED PARTY TRANSACTIONS

Transactions with the Adviser

We pay the Adviser certain fees as compensation for its services under the Advisory Agreement, consisting of a base management fee and an incentive fee and a loan servicing fee for the Adviser’s role as servicer pursuant to the Credit Facility, all as described below. On July ~~14, 2020,~~13, 2021, our Board of Directors, including a majority of the directors who are not parties to the Advisory Agreement or interested persons of either party, approved the annual renewal of the Advisory Agreement through August 31, ~~2021.~~2022.

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. David Dullum (our president) is also the executive vice president of private equity (buyouts) 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 fees, loan servicing fees, incentive fees, and associated non-contractual, unconditional, and irrevocable credits reflected in our accompanying Consolidated Statements of Operations:


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Average total assets subject to base management fee^(A)	$	623,200		$	594,000		$	597,400		$	619,000		$	715,400		$	597,800		$	689,700		$	584,500
Multiplied by prorated annual base management fee of 2.0%		0.5	%		0.5	%		1.5	%		1.5	%		0.5	%		0.5	%		1.0	%		1.0	%

Base management fee^(B)		3,116			2,970			8,961			9,285			3,577			2,989			6,897			5,845
Credits to fees from Adviser—other^(B)		(789	)		(817	)		(2,594	)		(2,647	)
Credits to fees from Adviser - other^(B)														(930	)		(1,070	)		(2,181	)		(1,805	)

Net base management fee	$	2,327		$	2,153		$	6,367		$	6,638		$	2,647		$	1,919		$	4,716		$	4,040

Loan servicing fee^(B)		1,786			1,794			5,242			5,139			1,794			1,747			3,662			3,456
Credits to base management fee—loan servicing fee^(B)		(1,786	)		(1,794	)		(5,242	)		(5,139	)
Credits to base management fee - loan servicing fee^(B)														(1,794	)		(1,747	)		(3,662	)		(3,456	)

Net loan servicing fee	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

Incentive fee – income-based	$	2,002		$	1,515		$	2,002		$	4,338		$	1,757		$	—		$	3,695		$	—
Incentive fee – capital gains-based^(C)		1,754			1,358			1,452			1,704			5,594			452			15,904			(302	)

Total incentive fee^(B)	$	3,756		$	2,873		$	3,454		$	6,042		$	7,351		$	452		$	19,599		$	(302	)
Credits to fees from Adviser—other^(B)		—			—			—			—
Credits to fees from Adviser - other^(B)														—			—			—			—

Net total incentive fee	$	3,756		$	2,873		$	3,454		$	6,042		$	7,351		$	452		$	19,599		$	(302	)

^(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 quarters within the respective periods and adjusted appropriately for any share issuances or repurchases during the periods.

^(B)	Reflected as a line item on our accompanying Consolidated Statement of Operations.

^(C)	The capital gains-based incentive fees are recorded in accordance with GAAP and do not necessarily reflect amounts contractually due under the terms of the Advisory Agreement.

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 2.0%, computed on the basis of the value of our average gross 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, valued at the end of the applicable quarters within the respective period 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: (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 Adviser non-contractually, unconditionally, and irrevocably credits 100% of any fees received 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 ~~$48~~$63 and ~~$0.1 million~~$132 for the three and ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, respectively, and ~~$0.1 million~~$71 and ~~$0.2 million~~$97 for the three and ~~nine~~six months ended ~~December 31, 2019,~~September 30, 2020, respectively, was retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser, primarily related to the valuation of portfolio companies.

Loan Servicing Fee

The Adviser also services the loans held by our wholly-owned subsidiary, Business Investment (the borrower under the Credit Facility), in return for which the Adviser receives a 2.0% annual fee based on the monthly aggregate outstanding balance of loans pledged under the Credit Facility. Since Business Investment is a consolidated subsidiary of ours, coupled with the fact that the total base management fee paid to the Adviser pursuant to the Advisory Agreement cannot exceed 2.0% of total assets (less any uninvested cash or cash equivalents resulting from borrowings) during any given calendar year, 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 payable to the Adviser under our Advisory Agreement consists of two parts: an income-based incentive fee and a capital 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% 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 our pre-incentive fee net investment income is payable quarterly to the Adviser and is computed as follows:

No incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the Hurdle Rate;

100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Rate but is less than 2.1875% of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter; and

20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter.

The second part of the incentive fee is a capital gains-based incentive fee that 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 realized capital gains, less any realized capital losses and unrealized depreciation, calculated as of the end of the preceding calendar year. The capital gains-based incentive fee payable to the Adviser is calculated based on (i) cumulative aggregate realized capital gains since our inception, less (ii) cumulative aggregate realized capital losses since our inception, less (iii) the entire portfolio’s aggregate unrealized capital depreciation, if any, as of the date of the calculation. If this number is positive at the applicable calculation date, 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. For calculation purposes, cumulative aggregate realized capital gains, if any, equals the sum of the excess between the net sales price of each investment, when sold, and the original cost of such investment since our inception. Cumulative aggregate realized capital losses equals the sum of the deficit between the net sales price of each investment, when sold, and the original cost of such investment since our inception. The entire portfolio’s aggregate unrealized capital depreciation, if any, equals the sum of the deficit between the fair value of each investment security as of the applicable calculation date and the original cost of such investment security. As of ~~December 31, 2020,~~and for the period ended September 30, 2021, no capital gains-based incentive fees were contractually due to the Adviser. ~~During~~As of and for the year ended March 31, ~~2020,~~2021, no capital gains-based incentive fees ~~of $8.1 million~~ were contractually due and paid to the Adviser.

In accordance with GAAP, accrual of the capital gains-based incentive fee is determined as if our investments had been liquidated at their fair values as of the end of the reporting period. Therefore, GAAP requires that the capital gains-based incentive fee accrual consider the 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 any such unrealized capital appreciation will be realized in the future. Accordingly, a GAAP accrual is calculated at the end of the reporting period based on (i) cumulative aggregate realized capital gains since our inception, plus (ii) the entire portfolio’s aggregate unrealized capital appreciation, if any, less (iii) cumulative aggregate realized capital losses since our inception, less (iv) the entire portfolio’s aggregate unrealized capital depreciation, if any. If such amount is positive at the end of a reporting period, a capital gains-based incentive fee equal to 20.0% of such amount, less the aggregate amount of capital gains-based incentive fees accrued in all prior years, is recorded, regardless of whether such amount is contractually due under the terms of the Advisory Agreement. If such amount is negative, then there is no accrual for such period and prior period accruals are reversed, as appropriate. During the three and ~~nine~~six months ended ~~December 31,~~September 30, 2021, we recorded capital gains-based incentive fees of $5.6 million and $15.9 million, respectively. During the three months ended September 30, 2020, we recorded capital gains-based incentive fees of ~~$1.8 million and $1.5 million, respectively.~~$0.5 million. During the ~~three and nine~~six months ended ~~December 31, 2019,~~September 30, 2020, we recorded a reversal of $0.3 million of previously accrued capital gains-based incentive ~~fees of $1.4 million and $1.7 million, respectively.~~fees.

Transactions with the Administrator

We reimburse the Administrator pursuant to the Administration Agreement for our allocable portion of the Administrator’s expenses incurred while performing services to us, which are primarily rent and salaries and benefits expenses of the Administrator’s employees, ~~including:~~including our chief financial officer and treasurer, chief valuation officer, chief compliance officer, and 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, Mr. LiCalsi (our general counsel & 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 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. On July ~~14, 2020,~~13, 2021, our Board of Directors, including a majority of the directors who are not parties to the Administration Agreement or interested persons of either party, approved the annual renewal of the Administration Agreement through August 31, ~~2021.~~2022.

Transactions with Gladstone Securities, LLC

Gladstone Securities, LLC (“Gladstone Securities”) is a privately held broker dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is 100% owned and controlled by David Gladstone, our chairman and chief executive officer. Mr. Gladstone also serves on the board of managers of Gladstone Securities.

~~Dealer Manager Agreement~~

On May 22, 2020, the Company, entered into a dealer manager agreement (the “Dealer Manager Agreement”), with Gladstone Securities whereby Gladstone Securities will serve as the Company’s exclusive dealer manager in connection with the Company’s offering (the “Offering”) of up to $350.0 million aggregate principal amount of the Company’s 6.00% Notes due 2040 (the “Notes”) on a “reasonable best efforts” basis.

Under the Dealer Manager Agreement, Gladstone Securities will provide certain sales, promotional and marketing services to the Company in connection with the Offering, and the Company will pay (i) selling commissions of up to 6.0% of the gross proceeds from sales of the Notes in the Offering and (ii) a dealer manager fee of up to 3.0% of the gross proceeds from sales of the Notes in the Offering (the “Dealer Manager Fee”). Gladstone Securities may, in its sole discretion, reallow a portion of the Dealer Manager Fee to participating broker-dealers in support of the Offering. During the nine months ended December 31, 2020, no Notes were sold and there were no selling commissions or Dealer Manager Fee incurred pursuant to the Dealer Manager Agreement.

Other Transactions

From time to time, Gladstone Securities provides ~~other~~ services, such as investment banking and due diligence services, to certain of our portfolio companies, for which it receives a fee. Any such fees paid by portfolio companies to Gladstone Securities do not impact the fees we pay to the Adviser or the non-contractual, unconditional, and irrevocable credits against the base management fee. During the three and ~~nine~~six months ended ~~December 31,~~September 30, 2021, the fees received by Gladstone Securities from our portfolio companies totaled $0.3 million and $0.4 million, respectively. During the three and six months ended September 30, 2020, the fees received by Gladstone Securities from our portfolio companies totaled ~~$0.3~~$0.4 million and ~~$0.6 million, respectively. During the three and nine months ended December 31, 2019, the fees received by Gladstone Securities from portfolio companies totaled $0.1 million and $0.5~~$0.4 million, respectively.

Related Party Fees Due

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


	As of December 31,		As of March 31,			As of September 30,		As of March 31,
	2020		2020			2021		2021
Base management and loan servicing fee due to Adviser, net of credits	$	987	$	(222	)	$	1,266	$	1,435
Incentive fee due to Adviser^(A)		10,841		7,387			30,080		14,163
Other due to Adviser		43		13			53		66

Total fees due to Adviser	$	11,871	$	7,178		$	31,399	$	15,664
Fee due to Administrator	$	462	$	582		$	571	$	577

Total related party fees due	$	12,333	$	7,760		$	31,970	$	16,241

^(A)

Includes a capital gains-based incentive fee of ~~$8.8~~$28.3 million and ~~$7.4~~$12.4 million as of September 30, 2021 and March 31, 2021, respectively, recorded in accordance with GAAP requirements, and which was not contractually due under the terms of the Advisory ~~Agreement as of December 31, 2020 and March 31, 2020.~~Agreement. Refer to Note 4 — Related Party Transactions — Transactions with the Adviser — Incentive Fee for additional information, including capital gains-based incentive fee payments made.

Net expenses receivable from Gladstone Capital Corporation, one of our affiliated funds, for reimbursement purposes, which includes certain co-investment expenses, totaled ~~$40~~$38 and ~~$70~~$0, as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, respectively. These amounts are generally settled in the quarter subsequent to being incurred and have been included in Other assets, net on the accompanying Consolidated Statements of Assets and Liabilities as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, respectively.

NOTE 5. BORROWINGS

Revolving Line of Credit

On ~~August 22, 2018,~~March 8, 2021, we, through our wholly-owned subsidiary, Business Investment, entered into Amendment No. 46 to the Fifth Amended and Restated Credit Agreement, originally entered into on April 30, 2013 and as previously amended, with KeyBank National Association (“KeyBank”) as administrative agent, lead arranger, managing agent and lender, the Adviser, as servicer, and certain other lenders party thereto. The revolving period was extended to ~~August 22, 2021,~~February 29, 2024, and if not renewed or extended by such date, all principal and interest will be due and payable on ~~August 22, 2023~~February 28, 2026 (two years after the revolving period end date). ~~Additionally,~~As of September 30, 2021, the Credit Facility ~~commitment amount was increased from $165.0 million to $200.0 million~~provided two one-year extension options that may be exercised on or before the first and second anniversary of March 8, 2021, subject to ~~certain terms and conditions, can be expanded~~approval by all lenders. Additionally, the COVID-19 Relief Period (described below) was extended to ~~a total facility amount of $300.0 million through additional commitments from existing or new lenders.~~September 30, 2021.

On August 10, 2020, we, through Business Investment, entered into Amendment No. 5 to the Credit Facility. Among other things, Amendment No. 5 ~~amends~~amended the Credit Facility to (i) add London Interbank Offered Rate (“LIBOR”) replacement language; (ii) implement a 0.5% LIBOR floor; (iii) reduce the facility size from $200.0 million to $180.0 million, which may be expanded to $300.0 million through additional commitments; and (iv) provide certain other changes to existing terms and covenants. In addition, Amendment No. 5 ~~provides~~provided for certain temporary changes during the COVID-19 Relief Period ~~(which began on August~~(August 10, 2020 ~~and ends on~~until March 31, 2021, ~~and which may be extended,~~ subject to extension under certain conditions) including: (i) amending the definition of “Effective Advance Rate,” provided that during such period the overall effective advance rate does not exceed 55%; and (ii) removing or changing certain “Excess Concentration Limits” (as defined in the Credit Facility).

Advances under the Credit Facility generally bear interest at 30-day LIBOR, subject to a floor of 0.5%, plus 2.85% per annum until ~~August 21, 2021,~~February 29, 2024, with the margin then increasing to 3.10% for the period from ~~August 22, 2021~~February 29, 2024 to ~~August 21, 2022,~~February 28, 2025, and increasing further to 3.35% thereafter. The Credit Facility has an unused commitment fee on the daily unused commitment amount of 0.50% per annum if the average unused commitment amount for the period is less than or equal to 50% of the total commitment amount, 0.75% per annum if the average unused commitment amount for the period is greater than 50% but less than or equal to 65% of the total commitment amount, and 1.00% per annum if the average unused commitment amount for the period is greater than 65% of the total commitment amount.

The following tables summarize noteworthy information related to the Credit Facility:


					As of September 30,		As of March 31,
	As of December 31, 2020		As of March 31, 2020		2021		2021
Commitment amount	$	180,000	$	200,000	$	180,000	$	180,000
Borrowings outstanding at cost		84,000		49,200		8,900		22,400
Availability^(A)		96,000		150,800		171,100		157,600


	For the Three Months Ended December 31,						For the Nine Months Ended December 31,						For the Three Months Ended September 30,						For the Six Months Ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Weighted-average borrowings outstanding	$	104,829		$	37,507		$	88,652		$	45,777		$	24,355		$	106,123		$	25,354		$	80,503
Effective interest rate^(B)		3.8	%		9.3	%		4.2	%		8.6	%		10.0	%		3.6	%		9.6	%		4.5	%
Commitment (unused) fees incurred	$	95		$	414		$	585		$	1,176		$	397		$	122		$	786		$	490

^(A)

Availability is subject to various constraints, characteristics and applicable advance rates based on collateral quality under the Credit Facility, which equated to an adjusted availability of ~~$96.0~~$171.1 million and ~~$137.6~~$157.6 million as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, respectively.

^(B)	Excludes the impact of deferred financing costs and includes unused commitment fees.

Among other things, the Credit Facility contains a performance guaranty that requires us to maintain (i) a minimum net worth (defined in the Credit Facility to include our mandatory redeemable term preferred stock) of the greater of $210.0 million or $210.0 million plus 50% of all equity and subordinated debt raised, minus 50% of any equity or subordinated debt redeemed or retired after November 16, 2016, which equated to ~~$231.0~~$286.3 million as of ~~December 31, 2020,~~September 30, 2021 (ii) asset coverage with respect to senior securities representing indebtedness of at least 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); and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code. As of ~~December 31, 2020,~~September 30, 2021, and as defined in the performance guaranty of the Credit Facility, we had a net worth of ~~$517.0~~$695.2 million, asset coverage on our senior securities representing indebtedness of ~~671.0%~~254.5%, calculated in compliance with the requirements of Sections 18 and 61 of the 1940 Act, and an active status as a BDC and RIC. As of ~~December 31, 2020,~~September 30, 2021, we were in compliance with all covenants under the Credit Facility.

Fair Value

34We elected to apply the fair value option of ASC Topic 825, “Financial Instruments,” to the Credit Facility, which was consistent with our application of ASC 820 to our investments. Generally, the fair value of the Credit Facility is determined using a yield analysis, which includes a DCF calculation and also takes into account the assumptions the Valuation Team believes market participants would use, including the estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar securities as of the measurement date. As of September 30, 2021 and March 31, 2021, the discount rate used to determine the fair value of the Credit Facility was 30-day LIBOR, with a 0.5% floor, plus 2.85% per annum, plus an unused commitment fee of 1.0%. Generally, an increase or decrease in the discount rate used in the DCF calculation may result in a corresponding decrease or increase, respectively, in the fair value of the Credit Facility. As of each of September 30, 2021 and March 31, 2021, the 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 accompanying Consolidated Statements of Operations.

The following tables provide relevant information and disclosures about the Credit Facility as of September 30, 2021 and March 31, 2021, and for the three and six months ended September 30, 2021 and 2020, as required by ASC 820:


	Level 3 – Borrowings
	Recurring Fair Value Measurements
	Reported in *Consolidated*
	*Statements of Assets and Liabilities* Using Significant Unobservable Inputs (Level 3)
	September 30, 2021		March 31, 2021
Credit Facility	$	8,900	$	22,400


Fair Value Measurements of Borrowings Using Significant
Unobservable Inputs (Level 3) Reported in
*Consolidated Statements of Assets and Liabilities*
	Credit
	Facility
Three Months Ended September 30, 2021:
Fair value at June 30, 2021	$	41,900
Borrowings		32,900
Repayments		(65,900	)

Fair value at September 30, 2021	$	8,900

Six Months Ended September 30, 2021:
Fair value at March 31, 2021	$	22,400
Borrowings		62,700
Repayments		(76,200	)

Fair value at September 30, 2021	$	8,900


Fair Value Measurements of Borrowings Using Significant
Unobservable Inputs (Level 3) Reported in
*Consolidated Statements of Assets and Liabilities*
	Credit
	Facility
Three Months Ended September 30, 2020:
Fair value at June 30, 2020	$	59,500
Borrowings		63,300
Repayments		(6,200	)

Fair value at September 30, 2020	$	116,600

Six Months Ended September 30, 2020:
Fair value at March 31, 2020	$	49,200
Borrowings		81,500
Repayments		(14,100	)

Fair value at September 30, 2020	$	116,600

The fair value of the collateral under the Credit Facility was $549.1 million and $524.0 million as of September 30, 2021 and March 31, 2021, respectively.

Notes ~~Offering~~Payable

5.00% Notes due 2026

In ~~May 2020,~~March 2021, we ~~entered into~~completed a ~~Dealer Manager Agreement~~public offering of 5.00% Notes due 2026 with ~~our affiliated dealer manager, Gladstone Securities, under which we may sell a maximum of $350.0 million~~an aggregate principal amount of $127.9 million (the “2026 Notes”), which resulted in net proceeds of approximately $123.8 million after deducting underwriting discounts, commissions and offering costs borne by us. The 2026 Notes are traded under the ticker symbol “GAINN” on the Nasdaq Global Select Market (“Nasdaq”). The 2026 Notes will mature on May 1, 2026 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 May 1, 2023. The 2026 Notes bear interest at a rate of 5.00% per year, which is payable quarterly in arrears.

The indenture relating to the 2026 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 ~~6.00% notes~~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, as applicable, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.

The 2026 Notes are recorded at the aggregate principal amount, less underwriting discounts, commissions, and offering costs, on our accompanying Consolidated Statements of Assets and Liabilities. Total underwriting discounts, commissions, and offering costs related to this offering were $4.1 million, which have been recorded as discounts to the aggregate principal amount on our accompanying Consolidated Statements of Assets and Liabilities and are being amortized over the period ending May 1, 2026, the maturity date.

4.875% Notes due ~~2040. However, the Company can only offer for sale up to $200.0 million~~2028

In August 2021, we completed a public offering of 4.875% Notes due 2028 with an aggregate principal amount of ~~the~~$134.6 million (the “2028 Notes”), which resulted in net proceeds of approximately $131.3 million after deducting underwriting discounts, commissions and offering costs borne by us. The 2028 Notes ~~pursuant to a prospectus supplement dated May 22, 2020 and a base prospectus dated July 24, 2019 relating to the registration statement on~~ ~~Form N-2 (File No. 333-~~ ~~232124)~~are traded under the ~~Securities Act of 1933, as amended.~~

ticker symbol “GAINZ” on the Nasdaq. The 2028 Notes will mature on November 1, ~~2040. We will pay~~2028 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, 2023. The 2028 Notes bear interest at a rate of 4.875% per year, which is payable quarterly in arrears.

The indenture relating to the 2028 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 ~~Notes on~~Company’s asset coverage meets the ~~first day~~threshold specified in the 1940 Act at the time of ~~each month, commencing on~~(and giving effect to) such declaration or purchase, and (iii) if, at any time, we are not subject to the ~~first day~~reporting requirements of the ~~month following~~Exchange Act, we will provide the ~~issuance of such Note. Subject to certain limitations,~~ holders of the 2028 Notes, ~~will~~as applicable, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.

The 2028 Notes are recorded at the aggregate principal amount, less underwriting discounts, commissions, and offering costs, on our accompanying Consolidated Statements of Assets and Liabilities. Total underwriting discounts, commissions, and offering costs related to this offering were $3.3 million, which have been recorded as discounts to the ~~option to tender their~~aggregate principal amount on our accompanying Consolidated Statements of Assets and Liabilities and are being amortized over the period ending November 1, 2028, the maturity date.

The following tables summarize our 2026 and 2028 Notes ~~for redemption at a redemption price~~as of ~~$22.50 per Note until~~September 30, 2021 and March 31, 2021:

As of September 30, 2021:


Description	Ticker Symbol	Date Issued	Maturity Date^(A)	Interest Rate			Notes Outstanding		Principal Amount per Note		Aggregate Principal Amount
2026 Notes	GAINN	March 2, 2021	May 1, 2026		5.00	%		5,117,500	$	25.00	$	127,938
2028 Notes	GAINZ	August 18, 2021	November 1, 2028		4.875	%		5,382,000	$	25.00	$	134,550

Notes payable, gross^(B)								10,499,500			$	262,488
Less: Discounts												(6,862	)

Notes payable, net^(C)											$	255,626

As of March 31, 2021:


Description	Ticker Symbol	Date Issued	Maturity Date^(A)	Interest Rate			Notes Outstanding		Principal Amount per Note		Aggregate Principal Amount
2026 Notes	GAINN	March 2, 2021	May 1, 2026		5.00	%		5,117,500	$	25.00	$	127,938

Notes payable, gross^(B)											$	127,938
Less: Discounts												(4,055	)

Notes payable, net^(C)											$	123,883

^(A)

The 2026 Notes can be redeemed at our option at any time on or after May 1, 2023. The 2028 Notes can be redeemed at our option at any time on or after November 1, 2023.

^(B)

As of September 30, 2021 and March 31, 2021, asset coverage on our senior securities representing indebtedness, calculated pursuant to Sections 18 and 61 of the 1940 Act, was 254.5% and 398.0%, respectively.

^(C)

Reflected as a line item on our accompanying Consolidated Statement of Assets and Liabilities.

The fair value, based on the ~~earlier~~last reported closing prices, of the ~~date upon which our Board~~2026 Notes and 2028 Notes as of ~~Directors, by resolution, suspends or terminates~~September 30, 2021 was $133.1 million and $144.1 million, respectively. The fair value, based on the ~~optional redemption right~~last reported closing prices, of the ~~holders or~~2026 Notes as of March 31, 2021 was $132.3 million. We consider the ~~date, if any, on which the Notes are listed on Nasdaq Global Select Market or another national securities exchange. In addition, we will repurchase the Notes, upon request, in the event~~closing prices of the holder’s death at a redemption price of $25.00 per Note. Except upon the occurrence of certain events that would constitute a change in control of us or to comply with applicable law, we may not redeem the Notes at our option until the later of (1) the ~~one-year~~ ~~anniversary of the termination of the offering of the~~2026 Notes and ~~(2) July~~2028 Notes to be Level 1 ~~2025. After such date, we may, at our sole option, redeem all or a portion of~~inputs within the Notes at a redemption price of $25.00 per Note. The Notes will be our direct unsecured obligations and rank equal in right of payment with all outstanding and future unsecured, unsubordinated indebtedness issued by us. As of December 31, 2020, no Notes have been issued.ASC 820 hierarchy.

Secured Borrowing

In August 2012, we entered into a participation agreement with a third-party related to $5.0 million of our secured second lien term debt investment in Ginsey Home Solutions, Inc. (“Ginsey”). In May 2014, we amended the agreement with the third-party to include an additional $0.1 million. ASC Topic 860, “Transfers and Servicing” requires us to treat the participation as a financing-type transaction. Specifically, the third-party has a senior claim to our remaining investment in the event of default by Ginsey which, in part, resulted in the loan participation bearing a rate of interest lower than the contractual rate established at origination. Therefore, our accompanying Consolidated Statements of Assets and Liabilities reflect the entire secured second lien term debt investment in Ginsey and a corresponding $5.1 million secured borrowing liability. The secured borrowing has a stated fixed interest rate of 7.0% and a maturity date of January 3, 2025.

~~Fair Value~~

~~We elected to apply the fair value option of ASC Topic 825, “~~~~Financial Instruments~~,” to the Credit Facility, which was consistent with our application of ASC 820 to our investments. Generally, the fair value of the Credit Facility is determined using a yield analysis, which includes a DCF calculation and also takes into account the assumptions the Valuation Team believes market participants would use, including 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, 2020, the discount rate used to determine the fair value of the Credit Facility was ~~30-day~~ ~~LIBOR, with a 0.5% floor, plus 2.85% per annum, plus an unused commitment fee of 0.75%. As of March 31, 2020, the discount rate used to determine the fair value of the Credit Facility was~~ ~~30-day~~ LIBOR, plus 2.85% per annum, plus an unused commitment fee of 1.0%. Generally, an increase or decrease in the discount rate used in the DCF calculation may result in a corresponding decrease or increase, respectively, in the fair value of the Credit Facility. As of each of December 31, 2020 and March 31, 2020, the Credit Facility was valued using Level 3 inputs and any changes in its fair value are recorded in Net unrealized depreciation of other on our accompanying ~~Consolidated Statements of Operations~~.

The following tables provide relevant information and disclosures about the Credit Facility as of December 31, 2020 and March 31, 2020, and for the three and nine months ended December 31, 2020 and 2019, as required by ASC 820:

   Level 3 – Borrowings
   Recurring Fair Value Measurements
Reported in Consolidated
Statements of Assets and Liabilities Using Significant
Unobservable Inputs (Level 3)
   December 31, 2020    March 31, 2020
Credit Facility
   $ 84,000    $ 49,200

Fair Value Measurements of Borrowings Using Significant
Unobservable Inputs (Level 3) Reported in
Consolidated Statements of Assets and Liabilities

   Credit
Facility
Three Months Ended December 31, 2020:

Fair value at September 30, 2020
   $ 116,600
Borrowings
   30,200
Repayments
   (62,800 )
Unrealized depreciation
   —


Fair value at December 31, 2020
   $ 84,000


Nine Months Ended December 31, 2020:

Fair value at March 31, 2020
   $ 49,200
Borrowings
   111,700
Repayments
   (76,900 )
Unrealized depreciation
   —


Fair value at December 31, 2020
   $ 84,000

Fair Value Measurements of Borrowings Using Significant
Unobservable Inputs (Level 3) Reported in
Consolidated Statements of Assets and Liabilities

   Credit
Facility
Three Months Ended December 31, 2019:

Fair value at September 30, 2019
   $ 46,964
Borrowings
   31,400
Repayments
   (74,000 )
Unrealized depreciation
   (154 )


Fair value at December 31, 2019
   $ 4,210


Nine Months Ended December 31, 2019:

Fair value at March 31, 2019
   $ 53,000
Borrowings
   131,400
Repayments
   (180,200 )
Unrealized appreciation
   10


Fair value at December 31, 2019
   $ 4,210

~~The fair value of the collateral under the Credit Facility was $507.2 million and $496.4 million as of December 31, 2020 and March 31, 2020, respectively.~~

NOTE 6. MANDATORILY REDEEMABLE PREFERRED STOCK

~~Preferred Stock Offerings~~

In ~~May 2020,~~August 2021, we ~~entered into sales agreements with Wedbush Securities, Inc. and Virtu Americas LLC (each~~used a ~~“Series E ATM Sales Agent”), under which we have~~portion of the ~~ability~~proceeds from the issuance of our 2028 Notes to ~~issue and sell~~voluntarily redeem all outstanding shares of our 6.375% Series E Cumulative Term Preferred Stock ~~(our~~(or “Series E Term Preferred Stock” or “Series E”), ~~from time to time, through the Series E ATM Sales Agents, up to $50.0 million aggregate~~which had a liquidation preference ~~in an~~ ~~“at-the-market”~~ ~~program (the “Series E ATM Program”). As~~ of ~~December 31, 2020, we had remaining capacity to sell up to $30.4 million~~$25.00 per share. In connection with the voluntary redemption of our Series E Term Preferred Stock, ~~under~~we incurred a loss on extinguishment of debt of $2.0 million, which was recorded in Realized loss on other in our accompanying Consolidated Statements of Operations and which was primarily comprised of unamortized deferred issuance costs at the ~~Series E ATM Program.~~

~~During the nine months ended December 31, 2020, we sold 784,853 shares~~time of our Series E Term Preferred Stock under the Series E ATM Program with an aggregate liquidation preference of $19.6 million. The weighted-average gross price per share net of discounts was $24.56 and resulted in gross proceeds of approximately $19.3 million. After deducting commissions and offering costs borne by us, net proceeds totaled approximately $19.1 million.

36redemption.

The following ~~tables summarize our 6.250% Series D Cumulative Term Preferred Stock (our “Series D Term Preferred Stock” or “Series D”) and~~table summarizes our Series E Term Preferred Stock outstanding as of ~~December 31, 2020 and~~ March 31, ~~2020:~~2021:

~~As of December~~ ~~31, 2020~~:

Class of Term Preferred Stock
   Ticker
Symbol    Date Issued    Mandatory
Redemption Date^(A)    Interest
Rate Shares
Outstanding    Liquidation
Preference
per Share    Aggregate
Liquidation
Preference
Series D
   GAINM    September 26, 2016    September 30, 2023    6.250 % 2,300,000    $ 25.00    $ 57,500
Series E
   GAINL    August 22, 2018    August 31, 2025    6.375 % 3,774,853    25.00    94,371






Term preferred stock, gross^(A)

6,074,853    $ 25.00    $ 151,871
Less: Discounts

      (3,118 )


Term preferred stock, net^(B)

      $ 148,753

As of March 31, ~~2020~~2021:


Class of Term Preferred Stock		Ticker Symbol	Date Issued	Mandatory Redemption Date^(A)	Interest Rate			Shares Outstanding		Liquidation Preference per Share		Aggregate Liquidation Preference			Ticker Symbol		Date Issued		Mandatory Redemption Date		Interest Rate			Shares Outstanding		Liquidation Preference per Share		Aggregate Liquidation Preference
Series D		GAINM	September 26, 2016	September 30, 2023		6.250	%		2,300,000	$	25.00	$	57,500
Series E		GAINL	August 22, 2018	August 31, 2025		6.375	%		2,990,000		25.00		74,750			GAINL		August 22, 2018		August 31, 2025		6.375	%		3,774,853	$	25.00	$	94,371

Term preferred stock, gross^(A)	Term preferred stock, gross^(A)								5,290,000	$	25.00	$	132,250												3,774,853	$	25.00	$	94,371
Less: Discounts	Less: Discounts												(3,090	)															(2,162	)

Term preferred stock, net^(B)	Term preferred stock, net^(B)											$	129,160															$	92,209

^(A)

As of ~~December 31, 2020, the Series D Term Preferred Stock and the Series E Term Preferred Stock are redeemable at any time. As of December 31, 2020 and~~ March 31, ~~2020,~~2021, asset coverage on our senior securities that are stock, calculated pursuant to Sections 18 and 61 of the 1940 Act, was ~~250.3% and 293.8%, respectively.~~248.6%.

^(B)

Reflected as a line item on our accompanying Consolidated Statement of Assets and ~~Liabilities~~ ~~pursuant to the adoption of Accounting Standard Update~~ ~~2015-03,~~ “~~Simplifying the Presentation of Debt Issuance Costs.~~”Liabilities.

The following tables summarize dividends declared by our Board of Directors and paid by us on ~~each of~~ our ~~series of mandatorily redeemable preferred stock~~Series E Term Preferred Stock and our 6.25% Series D Cumulative Term Preferred Stock (“Series D Term Preferred Stock”) during the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 and ~~2019:~~2020:

For the ~~Nine~~Six Months Ended ~~December~~September ~~31,~~30, 2021:


Declaration Date	Record Date		Payment Date	Dividend per Share of Series E Term Preferred Stock^(A)
April 13, 2021		April 23, 2021	April 30, 2021	$	0.13281250
April 13, 2021		May 19, 2021	May 28, 2021		0.13281250
April 13, 2021		June 18, 2021	June 30, 2021		0.13281250
July 13, 2021		July 23, 2021	July 30,2021		0.13281250
July 13, 2021		August 23, 2021	August 30, 2021		0.07968750	^(B)

			Total	$	0.61093750

For the Six Months Ended September 30, 2020:


Declaration Date	Record Date	Payment Date	Dividend per Share of Series D Term Preferred Stock		Dividend per Share of Series E Term Preferred Stock		Record Date		Payment Date	Dividend per Share of Series D Term Preferred Stock^(C)		Dividend per Share of Series E Term Preferred Stock^(A)
April 14, 2020	April 24, 2020	April 30, 2020	$	0.13020833	$	0.13281250		April 24, 2020	April 30, 2020	$	0.13020833	$	0.13281250
April 14, 2020	May 19, 2020	May 29, 2020		0.13020833		0.13281250		May 19, 2020	May 29, 2020		0.13020833		0.13281250
April 14, 2020	June 19, 2020	June 30, 2020		0.13020833		0.13281250		June 19, 2020	June 30, 2020		0.13020833		0.13281250
July 14, 2020	July 24, 2020	July 31, 2020		0.13020833		0.13281250		July 24, 2020	July 31, 2020		0.13020833		0.13281250
July 14, 2020	August 24, 2020	August 31, 2020		0.13020833		0.13281250		August 24, 2020	August 31, 2020		0.13020833		0.13281250
July 14, 2020	September 23, 2020	September 30, 2020		0.13020833		0.13281250		September 23, 2020	September 30, 2020		0.13020833		0.13281250
October 13, 2020	October 23, 2020	October 30, 2020		0.13020833		0.13281250
October 13, 2020	November 20, 2020	November 30, 2020		0.13020833		0.13281250
October 13, 2020	December 23, 2020	December 31, 2020		0.13020833		0.13281250

		Total	$	1.17187497	$	1.19531250			Total	$	0.78124998	$	0.79687500

37
^(A)
We voluntarily redeemed all outstanding shares of our Series E Term Preferred Stock on August 19, 2021.
^(B)
Represents accrued and unpaid dividends up to, but excluding, the redemption date of August 19, 2021.
^(C)
We voluntarily redeemed all outstanding shares of our Series D Term Preferred Stock on March 3, 2021.

~~For the Nine Months Ended December~~ ~~31, 2019~~:

Declaration Date

Record
Date

Payment
Date
   Dividend per
Share of
Series D Term
Preferred Stock    Dividend per
Share of
Series E Term
Preferred Stock
April 9, 2019
   April 22, 2019    April 30, 2019    $ 0.13020833    $ 0.13281250
April 9, 2019
   May 22, 2019    May 31, 2019    0.13020833    0.13281250
April 9, 2019
   June 19, 2019    June 28, 2019    0.13020833    0.13281250
July 9, 2019
   July 22, 2019    July 31, 2019    0.13020833    0.13281250
July 9, 2019
   August 20, 2019    August 30, 2019    0.13020833    0.13281250
July 9, 2019
   September 17, 2019    September 30, 2019    0.13020833    0.13281250
October 8, 2019
   October 22, 2019    October 31, 2019    0.13020833    0.13281250
October 8, 2019
   November 19, 2019    November 29, 2019    0.13020833    0.13281250
October 8, 2019
   December 19, 2019    December 31, 2019    0.13020833    0.13281250




      Total    $ 1.17187497    $ 1.19531250

The federal income tax characteristics of dividends paid to our preferred stockholders generally constitute ordinary income or capital gains to the extent of our current and accumulated earnings and profits and are 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~~If we determined the tax characterization of dividends paid to ~~our~~ preferred stockholders ~~during~~in the current calendar year ~~ended December 31, 2020 was 42.1%~~as of September 30, 2021, 71.3% would be from ordinary income and ~~57.9% from capital gains. The tax characterization of dividends paid to our preferred stockholders during the calendar year ended December 31, 2019 was 27.3% from ordinary income and 72.7%~~28.7% would be from capital gains.

In accordance with ASC Topic 480, “Distinguishing Liabilities from Equity,” mandatorily redeemable financial instruments should be classified as liabilities on the balance sheet. Our mandatorily redeemable preferred stock iswas recorded at the liquidation preference, less discounts, on our accompanying Consolidated Statements of Assets and Liabilities as of ~~December 31, 2020 and~~ March 31, ~~2020.~~2021. The related dividend payments to preferred stockholders are treated as dividend expense on our accompanying Consolidated Statements of Operations on the ex-dividend date.

The ~~following table summarizes the~~ fair value of ~~each of~~ our ~~series of mandatorily redeemable preferred stock~~Series E Term Preferred Stock, based on the last reported closing sale price as of ~~December 31, 2020 and~~ March 31, ~~2020, each of~~2021, which we consider to be a Level 1 input within the fair value ~~hierarchy:~~hierarchy, was $96.1 million.

   Fair Value as of
   December 31, 2020    March 31, 2020
Series D Term Preferred Stock
   $ 58,604    $ 53,590
Series E Term Preferred Stock
   95,126    64,554




Total
   $ 153,730    $ 118,144

NOTE 7. REGISTRATION STATEMENT AND COMMON EQUITY OFFERINGS

Registration Statement

On ~~June 14, 2019,~~September 3, 2021, we filed a registration statement on Form N-2 (File No. ~~333-232124)~~333-259302), which the SEC declared effective on ~~July 24, 2019.~~October 15, 2021. The 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, including through concurrent, separate offerings of such securities. As of ~~December 31, 2020,~~the date of this report, we had the ability to issue up to ~~$275.5~~$300.0 million of the securities registered under the registration statement.

~~Common Equity Offerings~~

In December 2019, we entered into equity distribution agreements with Wedbush Securities, Inc., Cantor Fitzgerald & Co., and Ladenburg Thalmann & Co., Inc. (each a “Common Stock ATM Sales Agent”), under which we have the ability to issue and sell shares of our common stock, from time to time, through the Common Stock ATM Sales Agents, up to an aggregate offering price of $35.0 million in an ~~at-the-market~~ ~~program (the “Common Stock ATM Program”). As of December 31, 2020, we had remaining capacity to sell up to $30.1 million of common stock under the Common Stock ATM Program.~~

During the three months ended June 30, 2020, we sold 155,560 shares of our common stock under the Common Stock ATM Program at a weighted-average gross price of $11.39 per share and raised approximately $1.8 million of gross proceeds. The weighted-average net price per share, after deducting commissions and offering costs borne by us, was $11.17 and resulted in total net proceeds of approximately $1.7 million. These sales were above our then current estimated NAV per share. We did not sell any shares of our common stock under the Common Stock ATM Program during the period from June 30, 2020 to December 31, 2020.

During the year ended March 31, 2020, we sold 227,004 shares of our common stock under the Common Stock ATM Program at a weighted-average gross price of $13.80 per share and raised approximately $3.1 million of gross proceeds. The weighted-average net price per share, after deducting commissions and offering costs borne by us, was $13.55 and resulted in total net proceeds of approximately $3.1 million. These sales were above our then current estimated NAV per share.

NOTE 8. NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER WEIGHTED-AVERAGE COMMON SHARE

The following table sets forth the computation of basic and diluted Net increase in net assets resulting from operations per weighted-average common share for the three and ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 and ~~2019:~~2020:


	Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Numerator: net increase in net assets resulting from operations	$	15,271	$	13,318	$	21,940	$	30,368	$	28,135	$	6,630	$	75,274	$	6,669
Denominator: basic and diluted weighted-average common shares		33,205,023		32,822,459		33,167,511		32,822,459		33,205,023		33,205,023		33,205,023		33,148,652

Basic and diluted net increase in net assets resulting from operations per weighted-average common share	$	0.46	$	0.41	$	0.66	$	0.93	$	0.85	$	0.20	$	2.27	$	0.20

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 and is based upon management’s estimate of Investment Company Taxable Income and net long-term capital gains, as well as amounts to be distributed in accordance with Section 855(a) of the Code. Based on that estimate, our Board of Directors declares monthly distributions, and supplemental distributions, as appropriate, to stockholders each quarter and deemed distributions of long-term capital gains annually as of the end of the fiscal year, as applicable.

The U.S. federal income tax characteristics of cash distributions paid to our common stockholders generally are reported to stockholders on IRS Form 1099 after the end of each calendar year. Estimates of tax characterization made on a quarterly basis may not be representative of the actual tax characterization of cash distributions for the full year. Estimates made on a quarterly basis are updated as of each interim reporting date. ~~The~~If we determined the tax characterization of cash distributions paid to ~~our~~ common stockholders ~~during~~in the current calendar year ~~ended December 31, 2020 was 93.9%~~as of September 30, 2021, 71.3% would be from ordinary income and ~~6.1%~~28.7% would be from capital gains. ~~The tax characterization of cash distributions paid to our common stockholders during the calendar year ended December 31, 2019 was 67.8% from ordinary income and 32.2% from capital gains.~~

We paid the following cash distributions to our common stockholders for the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 and ~~2019:~~2020:

Fiscal Year

Declaration Date

Record Date

Payment Date

Distribution
per Common Share

Declaration Date

Record Date

Payment Date

Distribution per Common Share

2021

April 14, 2020

April 24, 2020

April 30, 2020

0.070

2022

April 13, 2021

April 23, 2021

April 30, 2021

0.070

April 14, 2020

May 19, 2020

May 29, 2020

0.070

April 13, 2021

May 19, 2021

May 28, 2021

0.070

April 14, 2020

June 8, 2020

June 17, 2020

0.090

^(A)

April 13, 2021

June 8, 2021

June 17, 2021

0.060

^(A)

April 14, 2020

June 19, 2020

June 30, 2020

0.070

April 13, 2021

June 18, 2021

June 30, 2021

0.070

July 14, 2020

July 24, 2020

July 31, 2020

0.070

July 13, 2021

July 23, 2021

July 30, 2021

0.070

July 14, 2020

August 24, 2020

August 31, 2020

0.070

July 13, 2021

August 23, 2021

August 31, 2021

0.070

July 14, 2020

September 23, 2020

September 30, 2020

0.070

July 13, 2021

September 3, 2021

September 15, 2021

0.030

^(A)

October 13, 2020

October 23, 2020

October 30, 2020

0.070

July 13, 2021

September 22, 2021

September 30, 2021

0.070

October 13, 2020

November 20, 2020

November 30, 2020

0.070

October 13, 2020

December 23, 2020

December 31, 2020

0.070

Six Months Ended September 30, 2021:

0.510

Nine Months Ended December 31, 2020:

0.720

Fiscal Year

Declaration Date

Record Date

Payment Date

Distribution
per Common Share

Declaration Date

Record Date

Payment Date

Distribution per Common Share

2020

April 9, 2019

April 22, 2019

April 30, 2019

0.068

2021

April 14, 2020

April 24, 2020

April 30, 2020

0.070

April 9, 2019

May 22, 2019

May 31, 2019

0.068

April 14, 2020

May 19, 2020

May 29, 2020

0.070

April 9, 2019

June 5, 2019

June 14, 2019

0.090

^(A)

April 14, 2020

June 8, 2020

June 17, 2020

0.090

^(A)

April 9, 2019

June 19, 2019

June 28, 2019

0.068

April 14, 2020

June 19, 2020

June 30, 2020

0.070

July 9, 2019

July 22, 2019

July 31, 2019

0.068

July 14, 2020

July 24, 2020

July 31, 2020

0.070

July 9, 2019

August 20, 2019

August 30, 2019

0.068

July 14, 2020

August 24, 2020

August 31, 2020

0.070

July 9, 2019

September 4, 2019

September 13, 2019

0.030

^(A)

July 14, 2020

September 23, 2020

September 30, 2020

0.070

July 9, 2019

September 17, 2019

September 30, 2019

0.068

October 8, 2019

October 22, 2019

October 31, 2019

0.068

Six Months Ended September 30, 2020:

0.510

October 8, 2019

November 19, 2019

November 29, 2019

0.068

October 8, 2019

December 3, 2019

December 13, 2019

0.090

^(A)

October 8, 2019

December 19, 2019

December 31, 2019

0.068

Nine Months Ended December 31, 2019:

0.822

^(A)	Represents a supplemental distribution to common stockholders.

Aggregate cash distributions to our common stockholders declared and paid were ~~$23.9 million and $27.0~~$16.9 million for both the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 and ~~2019, respectively.~~2020.

For the three ~~and nine~~ months ended ~~December 31, 2020,~~September 30, 2021, we recorded ~~$0.4~~$2.1 million ~~and $1.0 million, respectively,~~ of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and increased Overdistributed net investment income and Accumulated net realized gain in excess of distributions on our accompanying Consolidated Statements of Assets and Liabilities. For the six months ended September 30, 2021, we recorded $2.7 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and Overdistributed net investment income and increased Accumulated net realized gain in excess of distributions on our accompanying Consolidated Statements of Assets and Liabilities.

For the three and six months ended September 30, 2020, we recorded $0.4 million and $0.6 million, respectively, of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and Accumulated net realized gain in excess of distributions and increased Underdistributed net investment income for both periods on our accompanying~~Consolidated Statements of Assets and Liabilities~~.

~~For the three and nine months ended December 31, 2019, we recorded $0.1 million and $1.4 million, respectively, of net adjustments for estimated permanent~~ ~~book-tax~~ differences to reflect tax character, which decreased Capital in excess of par value and Accumulated net realized gain in excess of distributions and increased Underdistributed (Overdistributed) net investment income for both periods on our Consolidated Statements of Assets and Liabilities.

We may distribute our net long-term capital gains, if any, in cash or elect to retain some or all of such gains, pay taxes at the U.S. federal corporate-level income tax rate on the amount retained, and designate the retained amount as a “deemed distribution.” If we elect to retain net long-term capital gains and deem them distributed, each U.S. common stockholder will be treated as if they received a distribution of their pro-rata share of the retained net long-term capital gain and the U.S. federal income tax paid. As a result, each U.S. common stockholder will (i) be required to report their pro rata share of the retained gain on their tax return as long-term capital gain, (ii) receive a refundable tax credit for their pro-rata share of federal income tax paid by us on the retained gain, and (iii) increase the tax basis of their shares of common stock by an amount equal to the deemed distribution less the tax credit. ~~In order to~~To use the deemed distribution approach, we must provide written notice to our common stockholders prior to the expiration of 60 days after the close of the relevant taxable year. For the year ended March 31, ~~2020,~~2021, we ~~elected~~did not elect to retain ~~$38.0 million, or $1.15 per common share, of~~ long-term capital gains and to treat them as deemed distributions to common stockholders. ~~We incurred $8.0 million, or $0.24 per common share, of federal income taxes on behalf of common stockholders, which was included in Taxes on deemed distribution of long-term capital gains on our~~ ~~Consolidated Statements of Operations~~ ~~for the year ended March 31, 2020 and in Other liabilities on our accompanying~~ ~~Consolidated Statements of Assets and Liabilities~~ ~~as of March 31, 2020 and which was paid during the three months ended June 30, 2020.~~

In addition, we obtained clarification of the treatment of deemed distributions with respect to Virginia state taxes from the Virginia Department of Revenue, which ruled that Virginia state taxes are imposed. Related to this matter, we previously recorded a $3.0 million reserve for uncertain tax positions, which was included in Taxes on deemed distribution of long-term capital gains on our accompanying ~~Consolidated Statements of Operations~~ ~~and in Other Liabilities on our accompanying~~ ~~Consolidated Statements of Assets and Liabilities~~ as of and for the year ended March 31, 2019. During the three months ended June 30, 2020, we reported and paid this amount with an amended Virginia tax return. As a result of the ruling, we also incurred $2.3 million of Virginia state taxes related to the deemed distribution for the year ended March 31, 2020, which was included in Taxes on deemed distribution of long-term capital gains on our ~~Consolidated Statements of Operations~~ ~~for the year ended March 31, 2020 and in Other Liabilities on our accompanying~~ ~~Consolidated Statements of Assets and Liabilities~~ ~~as of March 31, 2020 and which was paid during the three months ended September 30, 2020.~~

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 operation 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, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, we had no established reserves for such loss contingencies.

Escrow Holdbacks

From time to time, we enter into arrangements relating to exits of certain investments whereby specific amounts of the proceeds are held in escrow to be used to satisfy potential obligations, as stipulated in the sales agreements. We record escrow amounts in 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 accompanying Consolidated Statements of Assets and Liabilities. We establish reserves and holdbacks against escrow amounts if we determine that it is probable and estimable that a portion of the escrow amounts will not ultimately be released or received at the end of the escrow period. Reserves and holdbacks against escrow amounts were ~~$1.0~~$0.4 million and ~~$2.3~~$0.7 million as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, respectively.

Financial Commitments and Obligations

We may have line of credit and delayed draw term loan commitments to certain of our portfolio companies that have not been fully drawn. Since these line of credit and delayed draw term loan commitments have expiration dates and we expect many will never be fully drawn, the total line of credit and delayed draw term loan commitment amounts do not necessarily represent future cash requirements. We estimate the fair value of the combined unused line of credit and delayed draw term loan commitments as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020~~2021 to be immaterial.

We have also extended a guaranty on behalf of one of our portfolio companies. As of ~~December 31, 2020,~~September 30, 2021, we have not been required to make any payments on this guaranty, or any guaranties that existed in previous periods, and we consider the credit risk to be remote and the fair value of the guaranty as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020~~2021 to be immaterial.

As of ~~December 31, 2020,~~September 30, 2021, the following guaranty was outstanding:

A $1.0 million continuing guaranty of a wholesale financing facility agreement (the “Floor Plan Facility”) between DLL Finance LLC (f/k/a Agricredit Acceptance, LLC) and Country Club Enterprises, LLC (“CCE”). The Floor Plan Facility provides CCE with financing to bridge the time and cash flow gap between the order and delivery of golf carts to customers.

The following table summarizes the principal balances of unused line of credit and delayed draw term loan commitments and guaranties as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, which are not reflected as liabilities in the accompanying Consolidated Statements of Assets and Liabilities:

   December 31, 2020    March 31, 2020
Unused line of credit and delayed draw term loan commitments
   $ 5,450    $ 1,230
Guaranties
   1,000    1,000




Total
   $ 6,450    $ 2,230


	September 30, 2021		March 31, 2021
Unused line of credit and delayed draw term loan commitments	$	4,300	$	3,000
Guaranties		1,000		1,000

Total	$	5,300	$	4,000

NOTE 11. FINANCIAL HIGHLIGHTS


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Per Common Share Data:
Net asset value at beginning of period^(A)	$	10.86		$	12.39		$	11.17		$	12.40		$	12.66		$	10.87		$	11.52		$	11.17
Income from investment operations^(B)
Net investment income		0.19			0.19			0.45			0.66
Net realized gain on investments and other		0.27			1.04			0.31			1.70
Net unrealized depreciation of investments and other		—			(0.82	)		(0.10	)		(1.43	)
Net investment income (loss)														0.07			0.13			—			0.26
Net realized gain (loss) on investments and other														(0.05	)		0.02			0.01			0.04
Net unrealized appreciation (depreciation) of investments														0.83			0.05			2.26			(0.10	)

Total from investment operations		0.46			0.41			0.66			0.93			0.85			0.20			2.27			0.20
Effect of equity capital activity^(B)
Cash distributions to common stockholders from net investment income^(C)		(0.20	)		(0.20	)		(0.68	)		(0.56	)		(0.16	)		(0.20	)		(0.36	)		(0.48	)
Cash distributions to common stockholders from realized gains^(C)		(0.01	)		(0.09	)		(0.04	)		(0.26	)		(0.08	)		(0.01	)		(0.15	)		(0.03	)

Total from equity capital activity		(0.21	)		(0.29	)		(0.72	)		(0.82	)		(0.24	)		(0.21	)		(0.51	)		(0.51	)
Other, net^(B)(E)		—			—			—			—			—			—			(0.01	)		—

Net asset value at end of period^(A)	$	11.11		$	12.51		$	11.11		$	12.51		$	13.27		$	10.86		$	13.27		$	10.86

Per common share market value at beginning of period	$	9.10		$	12.34		$	7.85		$	11.60		$	14.41		$	10.24		$	12.23		$	7.85
Per common share market value at end of period		10.09			13.25			10.09			13.25			13.87			9.10			13.87			9.10
Total investment return^(F)		13.38	%		9.66	%		38.22	%		22.01	%		(2.13	)%		(9.10	)%		17.51	%		21.91	%
Common stock outstanding at end of period^(A)		33,205,023			32,822,459			33,205,023			32,822,459			33,205,023			33,205,023			33,205,023			33,205,023
Statement of Assets and Liabilities Data:
Net assets at end of period	$	368,823		$	410,498		$	368,823		$	410,498		$	440,701		$	360,526		$	440,701		$	360,526
Average net assets^(G)		362,659			407,740			362,862			407,866			426,635			360,232			410,553			362,964
Senior Securities Data:
Total borrowings, at cost	$	89,096		$	9,296		$	89,096		$	9,296		$	276,484		$	121,696		$	276,484		$	121,696
Mandatorily redeemable preferred stock^(H)		151,871			132,250			151,871			132,250			—			138,715			—			138,715
Ratios/Supplemental Data:
Ratio of net expenses to average net assets – annualized^(I)		12.26	%		9.65	%		9.23	%		9.27	%		15.35	%		8.30	%		17.88	%		7.72	%
Ratio of net investment income to average net assets – annualized^(J)		6.90			6.04			5.44			7.06
Ratio of net investment income (loss) to average net assets – annualized^(J)														2.03			4.85			(0.07	)		4.71

^(A)	Based on actual shares of common stock outstanding at the beginning or end of the corresponding period, as appropriate.

^(B)	Based on weighted-average basic common share data for the corresponding period.

^(C)

The tax character of distributions is determined based on taxable income calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP. For further information on the estimated character of our distributions to common stockholders, including changes in estimates, as applicable, refer to Note 9 — Distributions to Common Stockholders.

^(D)

Reserved.

^(E)	Represents the impact of the different share amounts (weighted-average basic common shares outstanding for the corresponding period and actual common shares outstanding at the end of the period) in the Per Common Share Data calculations and rounding impacts.

^(F)

Total return equals the change in the market value of our common stock from the beginning of the period, taking into account dividends 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, including changes in estimates, as applicable, refer to Note 9 — Distributions to Common Stockholders.

^(G)	Calculated using the average balance of net assets at the end of each month of the reporting period.

^(H)	Represents the aggregate liquidation preference of our mandatorily redeemable preferred stock.

^(I)

Ratio of net expenses to average net assets is computed using total expenses, net of any non-contractual, unconditional, and irrevocable credits of fees from the Adviser. Had we not received any non-contractual, unconditional, and irrevocable credits of fees ~~due to~~from the Adviser, the ratio of expenses to average net ~~assets -~~ assets—annualized would have been ~~15.10%~~17.90% and ~~12.21%~~11.42% for the three months ended ~~December 31,~~September 30, 2021 and 2020, ~~and 2019,~~ respectively, and ~~12.11%~~20.73% and ~~11.81%~~10.26% for the ~~nine~~six months ended ~~December 31,~~September 30, 2021 and 2020, ~~and 2019,~~ respectively.

^(J)

Had we not received any non-contractual, unconditional, and irrevocable credits of fees from the Adviser, the ratio of net investment income (loss) to average net ~~assets -~~ assets—annualized would have been ~~4.06%~~(0.52)% and ~~3.48%~~1.72% for the three months ended ~~December 31,~~September 30, 2021 and 2020, ~~and 2019,~~ respectively, and ~~2.56%~~(2.91)% and ~~4.51%~~1.81% for the ~~nine~~six months ended ~~December 31,~~September 30, 2021 and 2020, ~~and 2019,~~ respectively.

NOTE 12. UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES

In accordance with the SEC’s Regulation S-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) of the SEC’s Regulation S-X as of or during the ~~nine~~six month periods ended ~~December 31, 2020~~September 30, 2021 and ~~2019.~~2020.

NOTE 13. SUBSEQUENT EVENTS

Investment Activity

In October 2021, we invested $10.5 million in an existing portfolio company, Bassett Creek Services, Inc., in the form of secured first lien debt.

Distributions and Dividends

In ~~January~~October 2021, our Board of Directors declared the following monthly and supplemental distributions to common ~~stockholders and monthly dividends to holders of our Series D Term Preferred Stock and Series E Term Preferred Stock:~~stockholders:

Record Date
   Payment Date    Distribution per
Common Share    Dividend per
Share of
Series D Term
Preferred Stock    Dividend per
Share of
Series E Term
Preferred Stock
January 22, 2021    January 29, 2021    $ 0.07    $ 0.13020833    $ 0.13281250
February 17, 2021    February 26, 2021    0.07    0.13020833    0.13281250
March 18, 2021    March 31, 2021    0.07    0.13020833    0.13281250






   Total for the Quarter:    $ 0.21    $ 0.39062499    $ 0.39843750

~~COVID-19~~ ~~Impact~~

~~We continue to closely monitor and work with our portfolio companies to navigate the significant challenges created by the continuing~~ ~~COVID-19~~ pandemic and are focused on ensuring the safety of the Adviser’s and Administrator’s personnel and of the employees of our portfolio companies, while also managing our ongoing business activities. While we are closely monitoring all of our portfolio companies, our portfolio continues to be diverse from a geographic and industry perspective. Through proactive measures and continued diligence, the management teams of our portfolio companies continue to demonstrate their ability to respond effectively and efficiently to the challenges posed by ~~COVID-19~~ and related orders imposed by state and local governments, including paused or reversed reopening orders. We believe we have sufficient levels of liquidity to support our existing portfolio companies, as necessary, and selectively deploy capital in new investment opportunities.


Record Date	Payment Date	Distribution per Common Share
October 22, 2021	October 29, 2021	$	0.075
November 19, 2021	November 30, 2021		0.075
December 7, 2021	December 15, 2021		0.090	^(A)
December 23, 2021	December 31, 2021		0.075

	Total for the Quarter:	$	0.315

43
^(A)
Represents a supplemental distribution to common stockholders.

~~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”) and its affiliates, the use of borrowed money to finance our investments, the adequacy of our financing sources and working capital, and our ability to co-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: (1) changes in the economy and the capital markets; (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, David Dullum, or Terry Lee Brubaker; (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, regulation, or the general economy; (7) our business prospects and the prospects of our portfolio companies; (8) the degree and nature of our competition; (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 regulated investment company (“RIC”) and as a business development company (“BDC”); (12) the impact of COVID-19 generally and on the economy, the capital markets and our portfolio companies, including the measures taken by governmental authorities to address it; and (13) those factors described in Item 1A. “Risk Factors” herein and the “Risk Factors” sections of our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2020,~~2021, filed with the U.S. Securities and Exchange Commission (“SEC”) on May ~~12, 2020~~11, 2021 (the “Annual Report”). 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 Quarterly Report on Form 10-Q (the “Quarterly Report”). Except as required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report. 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, including subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements contained in this Quarterly Report 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.

In this Quarterly Report, the “Company,” “we,” “us,” and “our” refer to Gladstone Investment Corporation and its wholly-owned subsidiaries unless the context otherwise indicates. Dollar amounts, except per share amounts, are in thousands, unless otherwise indicated.

The following analysis of our financial condition and results of operations should be read in conjunction with our accompanying Consolidated Financial Statements and the notes thereto contained elsewhere in this Quarterly Report 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, results of operations or percentage relationships for any future periods.

OVERVIEW

General

We were incorporated under the General Corporation Law of the State of Delaware on February 18, 2005. On June 22, 2005, we completed our initial public offering and commenced operations. We operate as an externally managed, closed-end, non-diversified management investment company and have elected to be treated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). For U.S. federal income tax purposes, we have elected to be treated as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). To continue to qualify as a RIC for U.S. federal income tax purposes and obtain favorable RIC tax treatment, we must meet certain requirements, including certain minimum distribution requirements.

We are externally managed by the Adviser, an affiliate of ours and an SEC-registered investment adviser, pursuant to an investment advisory and management agreement (the “Advisory Agreement”). We have also entered into an administration agreement (the “Administration Agreement”) with Gladstone Administration, LLC (the “Administrator”), an affiliate of ours and the Adviser. Each of the Adviser and the Administrator are privately-held companies that are indirectly owned and controlled by David Gladstone, our chairman and chief executive officer. David Dullum, our president, also serves as the executive vice president of private equity (buyouts) of the Adviser. Michael LiCalsi, our general counsel and secretary, also serves as the Administrator’s president, general counsel, and secretary, as well as the executive vice president of administration of the Adviser).

Additionally, Gladstone Securities, LLC (“Gladstone Securities”), a privately-held broker-dealer (indirectly owned and controlled by Mr. Gladstone, our chairman and chief executive officer) registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation, 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 the non-contractual, unconditional, and irrevocable credits against the base management fee. For additional information refer to Note 4 — Related Party Transactions in the accompanying Notes to Consolidated Financial Statements. Since May of 2020, Gladstone Securities also acts as dealer manager in connection with our offering of up to $350.0 million aggregate principal amount of our 6.00% Notes due 2040 on a “reasonable best efforts” basis.

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: (i) achieve and grow current income by investing in debt securities of established 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 our stockholders that grow over time; and (ii) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities of established businesses, generally in combination with the aforementioned debt securities, that we believe can grow over time to permit us to sell our equity investments for capital gains. To achieve our objectives, our investment strategy is to invest in several categories of debt and equity securities, with individual investments generally totaling up to ~~$30~~$40 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 75% in debt securities and 25% in equity securities, at cost. As of ~~December 31, 2020,~~September 30, 2021, our investment portfolio was comprised of ~~74.2%~~74.4% in debt securities and ~~25.8%~~25.6% in equity securities, at cost.

We focus on investing in lower middle market private businesses (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $3 million to $20 million) (“Lower Middle Market”) in the U.S. that meet certain criteria, including: 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 portfolio company, reasonable capitalization of the portfolio company, including an ample equity contribution or cushion based on prevailing enterprise valuation multiples, and the potential to realize appreciation and gain liquidity in our equity position, if any. We anticipate that liquidity in our equity position will be achieved through a merger or acquisition of the portfolio company, a public offering of the portfolio company’s stock, or, to a lesser extent, by exercising our right to require the portfolio company to repurchase our warrants, though there can be no assurance that we will always have these rights. We invest in portfolio companies that need funds for growth capital, to finance acquisitions, including management buyouts, recapitalize or, to a lesser extent, refinance their existing debt facilities. We seek to avoid investing in high-risk, early-stage enterprises.

We invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the opportunity. In July 2012, the SEC granted us an exemptive order (the “Co-Investment Order”) that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Capital Corporation (“Gladstone Capital”) 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 Capital pursuant to the Co-Investment Order. We believe the 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 more co-investors, whether or not an affiliate of ours, our investment is likely to be smaller than if we were investing alone.

Our shares of common stock, ~~6.25% Series D Cumulative Term Preferred Stock~~our 5.00% Notes due 2026 (“~~Series D Term Preferred Stock”~~2026 Notes”), and ~~6.375% Series E Cumulative Term Preferred Stock~~our 4.875% Notes due 2028 (“~~Series E Term Preferred Stock”~~2028 Notes”) are traded on the Nasdaq Global Select Market (“Nasdaq”) under the trading symbols “GAIN,” ~~“GAINM,~~“GAINN,” and ~~“GAINL,~~“GAINZ,” respectively.

Business

Portfolio Activity

While the business environment remains competitive, we continue to see new investment opportunities consistent with our investment strategy of providing a combination of debt and equity in support of management and independent sponsor-led buyouts of Lower Middle Market companies in the U.S. During the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, we invested in two new portfolio companies, exited one portfolio company, merged two existing portfolio companies into a new portfolio company, and ~~exited~~dissolved one portfolio company. ~~As of December 31, 2020, our portfolio was comprised of 28 companies.~~ From our initial public offering in June 2005 through ~~December 31, 2020,~~September 30, 2021, we ~~made investments~~invested in 5355 companies, excluding investments in syndicated loans, for a total of approximately $1.4 billion, before giving effect to principal repayments and divestitures.

The majority of the debt securities in our portfolio have a success fee component, which enhances the yield on our debt investments. Unlike paid-in-kind (“PIK”) income, we generally do not recognize success fees as income until payment has been received. Due to the contingent nature of success fees, there are no guarantees that we will be able to collect any or all of these success fees or know the timing of any such collections. As a result, as of ~~December 31, 2020,~~September 30, 2021, we had unrecognized, contractual success fees of ~~$44.6~~$49.0 million, or ~~$1.34~~$1.48 per common share. Consistent with accounting principles generally accepted in the U.S. (“GAAP”), we have not recognized success fee receivables and related income in our accompanying Consolidated Financial Statements until earned.

From inception through ~~December 31, 2020,~~September 30, 2021, we completed sales of 2325 portfolio companies that we acquired under our buyout strategy (which excludes investments in syndicated loans). In the aggregate, these sales have generated ~~$237.7~~$240.8 million in net realized gains and ~~$31.4~~$33.4 million in other income upon exit, for a total increase to our net assets of ~~$269.1~~$274.2 million. We believe, in aggregate, these transactions were equity-oriented investment successes and exemplify our investment strategy of striving to achieve returns through current income on the debt portion of our investments and capital gains from the equity portion. The 2325 liquidity events have offset any realized losses since inception, which were primarily incurred during the 2008-2009 recession in connection with the sale of performing syndicated loans at a realized loss to pay off a former lender. ~~These~~The successful exits, in part, enabled us to increase the monthly distribution by 75.0% from March 2011 through ~~December 31, 2020,~~September 30, 2021, and allowed us to declare and pay 1113 supplemental ~~distributions.~~distributions to common stockholders through September 30, 2021.

Capital Raising Efforts

We have been able to meet our capital needs through extensions of and increases to the Fifth Amended and Restated Credit Agreement dated April 30, 2013, as amended (the “Credit Facility”), and by accessing the capital markets in the form of public offerings of common and preferred ~~stock.~~stock and unsecured notes. We have successfully extended the Credit Facility’s revolving period multiple times, most recently to ~~August 2021,~~February 2024, and currently have a total commitment amount of $180.0 million (with a potential total commitment of $300.0 million through additional commitments from new or existing lenders). During the ~~nine~~six months ended ~~December~~September 30, 2021, we issued our 2028 Notes for gross proceeds of $134.6 million. During the year ended March 31, ~~2020,~~2021, we issued our 2026 Notes for gross proceeds of $127.9 million and sold 155,560 shares of our common stock under our ~~common stock~~ at-the-market program (the “Common Stock ATM Program”) for gross proceeds of approximately $1.8 million, and 784,853 shares of our Series E Term Preferred Stock under our preferred stock at-the-market program (the “Series E ATM Program”) for gross proceeds of approximately $19.3 ~~million. During the year ended March 31, 2020, we sold 227,004 shares of our common stock under the Common Stock ATM Program for gross proceeds of approximately $3.1~~ million. Refer to “Liquidity and Capital Resources — Revolving Line of Credit” for further discussion of the Credit Facility and to “Liquidity and Capital Resources — Equity — Common Stock” and “Liquidity and Capital Resources — Equity — Term Preferred Stock” for further discussion of our common stock and mandatorily redeemable preferred stock, including our at-the-market ~~programs, and mandatorily redeemable preferred stock.~~programs.

Although we have been able to access the capital markets historically, market conditions, including the impact of COVID-19, may continue to affect the trading price of our common stock and thus our ability to finance new investments through the issuance of common equity. On ~~December 31, 2020,~~September 30, 2021, the closing market price of our common stock was ~~$10.09~~$13.87 per share, representing a ~~9.2% discount~~4.5% premium to our net asset value (“NAV”) of ~~$11.11~~$13.27 per share as of ~~December 31, 2020.~~September 30, 2021. When our common stock trades below NAV, our ability to issue additional equity is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock at an issuance price below the then-current NAV per share without stockholder approval, other than through sales to our then-existing stockholders pursuant to a rights offering.

At our 2020 Annual Meeting of Stockholders held on August 20, 2020, our stockholders approved a proposal authorizing us, with the subsequent approval of our board of directors (“Board of Directors”), to issue and sell shares of our common stock at a price below our then-current NAV per share, provided that the number of shares issued and sold pursuant to such authority does not exceed 25.0% of our then-outstanding common stock immediately prior to each such sale. This August 2020 stockholder authorization is in effect for one year from the date of stockholder approval. We sought and obtained stockholder approval concerning similar proposals at each Annual Meeting of Stockholders since 2008, and with our Board of Directors’ subsequent approval, we issued shares of our common stock in three offerings at a price below the then-current NAV per share, once in May 2017, once in March 2015, and once in October

2012. Certain sales under the previous Common Stock ATM Program in March and April of 2018 were also below the then-current estimated NAV per share. The resulting proceeds, in part, have allowed us to (i) grow our portfolio by making new investments, (ii) generate additional income through these new investments, (iii) ensure continued compliance with regulatory tests and (iv) increase our debt capital while still complying with our applicable ~~debt-to-equity~~ ~~ratios. Refer to~~ ~~“Liquidity and Capital Resources — Equity — Common Stock”~~ ~~for further discussion of our common stock.~~

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 asset coverage (as defined in Sections 18 and 61 of the 1940 Act), of at least 150% on each of our senior securities representing indebtedness and our senior securities that are stock (such as our ~~two~~previously outstanding series of term preferred ~~stock currently outstanding)~~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, our asset coverage requirements for senior securities changed from 200% to 150%, effective as of April 10, 2019, one year after the date of the Board of Directors’ approval. Notwithstanding the modified asset coverage requirement under the 1940 Act described above, we are separately subject to a minimum asset coverage requirement of 200% with respect to our Series D Term Preferred Stock.

As of ~~December 31, 2020,~~September 30, 2021, our asset coverage ratio on our senior securities representing indebtedness was ~~671.0% and our asset coverage on our senior securities that are stock was 250.3%~~254.5%.

Investment Highlights

Investment Activity

During the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, the following significant transactions occurred:

In ~~July 2020,~~May 2021, we dissolved our investment in Channel Technologies Group, LLC (“CTG”) and recorded a realized loss of $1.8 million.

In ~~September 2020,~~June 2021, we invested an additional ~~$8.0~~$6.5 million in ~~PSI Molded Plastics, Inc.~~J.R. Hobbs Co. – Atlanta, LLC (“~~PSI Molded”) in the form of preferred equity and also amended certain terms of our existing debt.~~

~~In December 2020, we invested an additional $3.0 million in Galaxy Technologies, Inc. (“Galaxy”~~J.R. Hobbs”) in the form of secured second lien debt. In connection with ~~this~~the investment, ~~Galaxy purchased SBS Industries, LLC (a subsidiary of SBS Industries Holdings, Inc. (“SBS Industries”), one of~~ our ~~other portfolio companies). SBS Industries used proceeds from the sale~~secured second lien debt was converted to ~~partially repay our $11.4 million~~secured first lien ~~debt, resulting in a realized loss of $8.5 million.~~debt.

In ~~December 2020,~~June 2021, we sold our investment in ~~Frontier Packaging,~~Head Country, Inc. (“~~Frontier”~~Head Country”), which resulted in ~~dividend income of $0.9 million,~~ success fee income of ~~$0.2~~$2.0 million and a realized gain of ~~$14.0~~$3.6 million. In connection with the sale, we received net cash proceeds of ~~$26.0~~$16.7 million, including the repayment of our debt investment of ~~$9.5~~$9.1 million at par.

47In July 2021, we invested an additional $5.9 million in the form of secured first lien debt into Nocturne.

The following significant investment activity occurred subsequent to September 30, 2021. Also refer to Note 13 – Subsequent Events in the accompanying Notes to Consolidated Financial Statements.

In October 2021, we invested $10.5 million in an existing portfolio company, Bassett Creek Services, Inc., in the form of secured first lien debt.

Recent Developments

Distributions and Dividends

In ~~January 2020,~~October 2021, our Board of Directors declared the following monthly and supplemental cash distributions to common ~~stockholders and monthly dividends to holders of our Series D Term Preferred Stock and Series E Term Preferred Stock:~~stockholders:


Record Date	Payment Date	Distribution per Common Share
October 22, 2021	October 29, 2021	$	0.075
November 19, 2021	November 30, 2021		0.075
December 7, 2021	December 15, 2021		0.090	^(A)
December 23, 2021	December 31, 2021		0.075

	Total for the Quarter:	$	0.315

^(A)	Represents a supplemental distribution to common stockholders.

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 London Interbank Offered Rate (“LIBOR”)) and, to a lesser extent, at fixed rates. Most U.S. dollar LIBOR isare currently anticipated to be phased out in June 2023. LIBOR may 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. We expect we will need to continue to renegotiate ~~certain~~a limited number of loan ~~documents~~agreements with our portfolio companies ~~that utilize LIBOR as~~to include fallback language providing a ~~factor in determining~~mechanism for the parties to negotiate a new reference interest rate in the event that LIBOR ceases to ~~replace LIBOR with the new standard that is established.~~exist. 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.

COVID-19 Impact

We continue to closely monitor and work with our portfolio companies to navigate the significant challenges created by the continuing COVID-19 pandemic ~~pandemic~~ and ~~are~~remain focused on ensuring the safety of the Adviser’s and Administrator’s personnel and of the employees of our portfolio companies, while also managing our ongoing business activities. While we are closely monitoring all of our portfolio companies, our portfolio continues to be diverse from a geographic and industry perspective. Through proactive measures and continued diligence, the management teams of our portfolio companies continue to demonstrate their ability to respond effectively and efficiently to the challenges posed by COVID-19, including its variants, and related orders imposed by state and local governments, including paused or reversed reopening orders. 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, 2020~~September 30, 2021 to the Three Months Ended ~~December 31, 2019~~September 30, 2020


	For the Three Months Ended December 31,												For the Three Months Ended September 30,
	2020			2019			$ Change			% Change			2021			2020			$ Change			% Change
INVESTMENT INCOME
Interest income	$	12,148		$	12,126		$	22			0.2	%	$	14,298		$	11,840		$	2,458			20.8	%
Dividend and success fee income		5,224			3,870			1,354			35.0			4,240			—			4,240			NM

Total investment income		17,372			15,996			1,376			8.6			18,538			11,840			6,698			56.6

EXPENSES
Base management fee		3,116			2,970			146			4.9			3,577			2,989			588			19.7
Loan servicing fee		1,786			1,794			(8	)		(0.4	)		1,794			1,747			47			2.7
Incentive fee		3,756			2,873			883			30.7			7,351			452			6,899			NM
Administration fee		382			369			13			3.5			571			390			181			46.4
Interest and dividend expense		3,383			3,053			330			10.8			3,884			3,213			671			20.9
Amortization of deferred financing costs and discounts		451			373			78			20.9			452			466			(14	)		(3.0	)
Other		818			1,017			(199	)		(19.6	)		1,468			1,032			436			42.2

Expenses before credits from Adviser		13,692			12,449			1,243			10.0			19,097			10,289			8,808			85.6
Credits to fees from Adviser		(2,575	)		(2,611	)		36			(1.4	)		(2,724	)		(2,817	)		93			(3.3	)

Total expenses, net of credits to fees		11,117			9,838			1,279			13.0			16,373			7,472			8,901			119.1

NET INVESTMENT INCOME		6,255			6,158			97			1.6			2,165			4,368			(2,203	)		(50.4	)

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments		9,105			34,005			(24,900	)		(73.2	)		464			621			(157	)		(25.3	)
Net unrealized depreciation of investments		(89	)		(26,999	)		26,910			99.7
Net unrealized depreciation of other		—			154			(154	)		(100.0	)
Net realized loss on other														(1,998	)		—			(1,998	)		NM
Net unrealized appreciation (depreciation) of investments														27,504			1,641			25,863			NM

Net realized and unrealized gain		9,016			7,160			1,856			25.9
Net realized and unrealized gain (loss)														25,970			2,262			23,708			NM

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	15,271		$	13,318		$	1,953			14.7	%	$	28,135		$	6,630		$	21,505			324.4

BASIC AND DILUTED PER COMMON SHARE:
Net investment income	$	0.19		$	0.19		$	—			0.0	%	$	0.07		$	0.13		$	(0.06	)		(46.2	)%

Net increase in net assets resulting from operations	$	0.46		$	0.41		$	0.05			12.2	%	$	0.85		$	0.20		$	0.65			325.0

NM = Not Meaningful

Investment Income

Total investment income increased ~~8.6%~~56.6% for the three months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period. The increase was ~~primarily~~ due to ~~an increase~~increases in both interest income and dividend and success fee income.

Interest income from our investments in debt securities increased ~~0.2%~~20.8% for the three months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period. During the three months ended September 30, 2021, we received $1.6 million of past due interest from certain loans that were previously on non-accrual status. Generally, the level of interest income from investments is directly related to the principal balance of our interest-bearing investment portfolio outstanding during the period multiplied by the weighted-average yield. The weighted-average principal balance of our interest-bearing investment portfolio during the three months ended ~~December 31, 2020~~ September 30, 2021was ~~$404.0~~$425.5 million, compared to ~~$383.0~~$388.7 million for the prior year period. This increase was primarily due to the $79.5 million of loans returned to accrual status, the origination of ~~$61.9~~$54.2 million of new debt investments, and ~~$55.7~~$48.4 million of follow-on debt investments to existing portfolio companies, partially offset by ~~$55.3~~$64.2 million of loans placed on non-accrual status and $43.3 million of pay-offs, restructurings, or write-offs of debt investments ~~and $47.9 million of loans placed on~~ ~~non-accrual~~ ~~status~~ after ~~September~~June 30, ~~2019,~~2020, and their respective impact on the weighted-average principal balance when considering timing of new investments, pay-offs, restructurings, write-offs, and accrual status changes, as applicable. The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was ~~11.9%~~13.3% for the three months ended ~~December 31, 2020,~~September 30, 2021, compared to ~~12.6%~~12.1% for the prior year period. The weighted-average yield may vary from period to period, based on the current stated interest rate on interest-bearing investments.

As of ~~December 31,~~September 30, 2021, our loans to J.R. Hobbs, The Mountain Corporation (“The Mountain”), and SBS Industries Holdings, Inc (“SBS”) were on non-accrual status, with an aggregate debt cost basis of $81.3 million. As of September 30, 2020, certain of our loans to B+T Group Acquisition, Inc. (“B+T”), Horizon Facilities Services, Inc. (“Horizon”), The Mountain, ~~Corporation (“The Mountain”),~~ PSI Molded Plastics, Inc. (“PSI Molded”), and SOG Specialty Knives & Tools, LLC (“SOG”), were on non-accrual status, with an aggregate debt cost basis of ~~$95.1~~$94.9 million. ~~As of December 31, 2019, certain of our loans to Meridian Rack & Pinion, Inc. (“Meridian”), The Mountain, PSI Molded, and SOG were on~~ ~~non-accrual~~ ~~status, with an aggregate debt cost basis of $56.4 million.~~

Dividend and success fee income for the three months ended ~~December 31, 2020~~September 30, 2021 increased ~~35.0%~~$4.2 million from the prior year period. During the three months ended ~~December 31, 2020,~~September 30, 2021, dividend and success fee income consisted ~~primarily~~ of ~~$5.0~~$2.6 million of success fee income and $1.6 million of dividend income. During the three months ended ~~December 31, 2019,~~September 30, 2020, we did not earn any dividend and success fee ~~income consisted primarily of $3.6 million of dividend~~ income.

As of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, no single investment represented greater than 10% of the total investment portfolio at fair value.

Expenses

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased ~~13.0%~~119.1% during the three months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period, primarily due to an increase in the incentive fee, ~~and~~as well as increases in interest and dividend ~~expense.~~expense, and the base management fee.

In accordance with GAAP, we recorded a $5.6 million capital gains-based incentive fee ~~of $1.8 million~~ during the three months ended ~~December 31, 2020,~~September 30, 2021, compared to a capital gains-based incentive fee of ~~$1.4~~$0.5 million during the three months ended ~~December 31, 2019.~~September 30, 2020. The capital gains-based incentive fee was a result of the net impact of net realized gains (losses) and net unrealized appreciation (depreciation) on investments during the respective periods. The income-based incentive fee increased by ~~$0.5~~$1.8 million for the three months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period, ~~primarily due to~~as the increase in pre-incentive fee net investment income ~~as well as~~more than offset the ~~decrease~~increase in net assets, which drives the hurdle rate.

The base management fee, loan servicing fee, incentive fee, and their related non-contractual, unconditional, and irrevocable credits are computed quarterly, as described under “Transactions with the Adviser” in Note 4 — Related Party Transactions in the accompanying Notes to Consolidated Financial Statements and are summarized in the following table:


	Three Months Ended December 31,						Three Months Ended September 30,
	2020			2019			2021			2020
Average total assets subject to base management fee^(A)	$	623,200		$	594,000		$	715,400		$	597,800
Multiplied by prorated annual base management fee of 2.0%		0.5	%		0.5	%		0.5	%		0.5	%

Base management fee^(B)		3,116			2,970			3,577			2,989
Credits to fees from Adviser—other^(B)		(789	)		(817	)
Credits to fees from Adviser - other^(B)								(930	)		(1,070	)

Net base management fee	$	2,327		$	2,153		$	2,647		$	1,919

Loan servicing fee^(B)		1,786			1,794			1,794			1,747
Credits to base management fee—loan servicing fee^(B)		(1,786	)		(1,794	)
Credits to base management fee - loan servicing fee^(B)								(1,794	)		(1,747	)

Net loan servicing fee	$	—		$	—		$	—		$	—

Incentive fee – income-based	$	2,002		$	1,515		$	1,757		$	—
Incentive fee – capital gains-based^(C)		1,754			1,358			5,594			452

Total incentive fee^(B)	$	3,756		$	2,873		$	7,351		$	452
Credits to fees from Adviser—other^(B)		—			—
Credits to fees from Adviser - other^(B)								—			—

Net total incentive fee	$	3,756		$	2,873		$	7,351		$	452

^(A)

^(B)	Reflected as a line item on our Consolidated Statement of Operations.

^(C)	The capital gains-based incentive fees are recorded in accordance with GAAP and do not necessarily reflect amounts contractually due under the terms of the Advisory Agreement.

Interest and dividend expense increased ~~10.8%~~20.9% during the three months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period, primarily due to ~~a $0.2 million~~an increase in ~~dividend~~interest expense, as a result of the Series E ATM Program sales during the current fiscal year. Interest expense increased $0.1 million primarily as a result of the higher weighted-average balance outstanding on the Credit Facility, which was partially offset by a decrease in dividend expense. Interest expense increased by $2.0 million due to the issuance of the 2026 Notes in March 2021 and the 2028 Notes in August 2021, which was partially offset by lower ~~effective~~ interest ~~rate.~~expense related to the Credit Facility. The weighted-average balance outstanding on the Credit Facility during the three months ended ~~December 31, 2020~~September 30, 2021 was ~~$104.8~~$24.4 million, as compared to ~~$37.5~~$106.1 million in the prior year period.

The effective interest rate on the Credit Facility, excluding the impact of deferred financing costs, during the three months ended ~~December 31, 2020~~September 30, 2021 was ~~3.8%~~10.0%, as compared to ~~9.3%~~3.6% in the prior year period. The ~~decrease~~increase in the effective interest rate on the Credit Facility was primarily a result of ~~a decrease in LIBOR and a decrease~~an increase in unused commitment fees on the undrawn portion of the Credit Facility. ~~Refer to~~ ~~“Liquidity and Capital Resources — Revolving Line of Credit”~~ ~~for further discussion~~Dividend expense decreased by $1.4 million as a result of the ~~Credit Facility.~~6.25% Series D Cumulative Term Preferred Stock (“Series D Term Preferred Stock”) and 6.375% Series E Cumulative Term Preferred Stock (“Series E Term Preferred Stock”) redemptions in March 2021 and August 2021, respectively, partially offset by the Series E ATM Program sales during the prior fiscal year.

Realized and Unrealized Gain (Loss)

Net Realized Gain (Loss) on Investments

During the three months ended ~~December 31,~~September 30, 2021, we recorded net realized gains on investments of $0.5 million, primarily related to previous exits of certain investments. During the three months ended September 30, 2020, we recorded net realized gains on investments of ~~$9.1~~$0.6 million ~~primarily~~ related to ~~a $14.0 million realized gain from the exit~~previous exits of ~~Frontier and a $3.3 million realized gain from the recapitalization of Old World, partially offset by an $8.5 million realized loss related to the partial~~ ~~write-off~~ ~~of a debt investment in SBS Industries.~~ certain investments.

Net Realized Gain (Loss) on Other

During the three months ended ~~December 31, 2019,~~September 30, 2021, we recorded a net realized ~~gains~~loss on ~~investments~~other of ~~$34.0~~$2.0 million, which primarily related to ~~a $47.9 million~~unamortized deferred issuance costs written off upon the redemption of our Series E Term Preferred Stock in August 2021. During the three months ended September 30, 2020, there were no realized ~~gain from the exit of Nth Degree, Inc. (“Nth Degree”) partially offset by a $14.5 million realized loss from the exit of~~ ~~B-Dry,~~ ~~LLC~~ ~~(“B-Dry”).~~gains or losses on other.

Net Unrealized Appreciation (Depreciation) of Investments

During the three months ended ~~December 31, 2020,~~September 30, 2021, we recorded net unrealized ~~depreciation~~appreciation of investments of ~~$0.1~~$27.5 million. The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the three months ended ~~December 31, 2020~~ September 30, 2021were as follows:


	Three Months Ended December 31, 2020												Three Months Ended September 30, 2021
Portfolio Company	Realized Gain (Loss)			Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation			Net Gain (Loss)			Realized Gain (Loss)		Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation		Net Gain (Loss)
Pioneer Square Brands, Inc.	$	—		$	4,420		$	—		$	4,420
Schylling, Inc.													$	—	$	6,277		$	—	$	6,277
Basset Creek Services, Inc.														—		5,474			—		5,474
Counsel Press, Inc.														—		4,903			—		4,903
Old World Christmas, Inc.														—		3,986			—		3,986
B+T Group Acquisition, Inc.														—		3,971			—		3,971
Educators Resource, Inc.		—			3,488			—			3,488			—		3,607			—		3,607
Old World Christmas, Inc.		3,289			27			—			3,316
Horizon Facilities Service, Inc.														—		2,983			—		2,983
ImageWorks Display and Marketing Group, Inc.														—		2,938			—		2,938
Brunswick Bowling Products, Inc.														—		2,326			—		2,326
Mason West, LLC														—		2,064			—		2,064
The Maids International, LLC														—		1,873			—		1,873
SOG Specialty Knives and Tools, LLC														—		1,796			—		1,796
Nocturne Villa Rentals, Inc.														—		892			—		892
Diligent Delivery Systems		—			2,961			—			2,961			—		525			—		525
Frontier Packaging, Inc.		14,032			—			(11,869	)		2,163
SOG Specialty Knives and Tools, LLC		—			1,806			—			1,806
Schylling, Inc.		—			1,138			—			1,138
Head Country, Inc.		—			916			—			916
Horizon Facilities Service, Inc.		—			909			—			909
The Maids International, LLC		—			495			—			495
J.R. Hobbs Co. – Atlanta, LLC														—		(2,625	)		—		(2,625	)
SBS Industries Holdings, Inc.														—		(3,278	)		—		(3,278	)
Ginsey Home Solutions, Inc.		—			480			—			480			—		(3,903	)		—		(3,903	)
Basset Creek Services, Inc.		—			469			—			469
PSI Molded Plastics, Inc.		—			459			—			459
ImageWorks Display and Marketing Group, Inc.		—			(1,411	)		—			(1,411	)
D.P.M.S., Inc.		—			(1,805	)		—			(1,805	)
Brunswick Bowling Products, Inc.		—			(4,825	)		—			(4,825	)
SBS Industries Holdings, Inc.		(8,470	)		1,580			—			(6,890	)
Galaxy Technologies Holdings, Inc.														—		(6,320	)		—		(6,320	)
Other, net (<$1.0 million, net)		254			673			—			927			464		15			—		479

Total	$	9,105		$	11,780		$	(11,869	)	$	9,016		$	464	$	27,504		$	—	$	27,968

The primary drivers of net unrealized ~~depreciation~~appreciation of ~~investments of $0.1~~$27.5 million for the three months ended ~~December 31, 2020~~September 30, 2021 were the increased performance of certain portfolio companies and an increase in comparable transaction multiples used to estimate the fair value of certain of our portfolio companies, which were partially offset by a decline in performance of certain other portfolio companies. In part, the performance of certain of our portfolio companies was driven by the impact COVID-19 has had or is expected to have on our portfolio companies and the markets in which they operate, including government restrictions on the portfolio companies’ ability to operate under historical conditions, current and future shutdowns and reopening restrictions, as well as demand for their products and general economic outlook, or the reversal of ~~previously~~such impact towards pre-COVID-19 levels.

During the three months ended September 30, 2020, we recorded net unrealized appreciation of investments of $1.6 million. The realized gains (losses) and unrealized appreciation (depreciation) across our ~~investment~~investments for the three months ended September 30, 2020were as follows:


	Three Months Ended September 30, 2020
Portfolio Company	Realized Gain (Loss)		Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation		Net Gain (Loss)
Pioneer Square Brands, Inc.	$	—	$	11,867		$	—	$	11,867
Ginsey Home Solutions, Inc.		—		2,414			—		2,414
Frontier Packaging, Inc.		—		2,150			—		2,150
SOG Specialty Knives & Tools, LLC		—		1,982			—		1,982
ImageWorks Display and Marketing Group, Inc.		—		1,451			—		1,451
Counsel Press, Inc.		—		(1,239	)		—		(1,239	)
Edge Adhesives Holdings, Inc.		—		(1,269	)		—		(1,269	)
D.P.M.S., Inc.		—		(2,253	)		—		(2,253	)
PSI Molded Plastics, Inc.		—		(4,592	)		—		(4,592	)
Brunswick Bowling Products, Inc.		—		(8,606	)		—		(8,606	)
Other, net (<$1.0 million, net)		621		(264	)		—		357

Total	$	621	$	1,641		$	—	$	2,262

The primary driver of net unrealized appreciation of investments of $1.6 million for the three months ended September 30, 2020 was an increase in ~~Frontier upon its exit and decreased~~ performance of certain of our portfolio companies, which was partially offset by ~~an increase in~~decreased performance of certain of our other portfolio companies and a decrease in comparable multiples used to estimate the fair value of some of our portfolio companies. In part, the performance of certain of our portfolio companies was driven by the impact COVID-19 has had or is expected to have on our portfolio companies and the markets in which they operate, including government restrictions on the portfolio companies’ ability to operate under historical conditions, current and future shutdowns and reopening restrictions, as well as demand for their products and general economic outlook.

During the three months ended December 31, 2019, we recorded net unrealized depreciation of investments of $27.0 million. The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the three months ended December 31, 2019 were as follows:

   Three Months Ended December 31, 2019
Portfolio Company
   Realized
Gain
(Loss)    Unrealized
Appreciation
(Depreciation)    Reversal of
Unrealized
(Appreciation)
Depreciation    Net Gain
(Loss)
Nth Degree, Inc.
   $ 47,861    $ 1,926    $ (40,846 )    $ 8,941
Galaxy Tool Holding Corporation
   —      6,577    —      6,577
Old World Christmas, Inc.
   —      2,447    —      2,447
Counsel Press, Inc.
   —      2,152    —      2,152
Pioneer Square Brands, Inc.
   —      1,694    —      1,694
B-Dry, LLC.
   (14,452 )    —      14,699    247
B+T Group Acquisition, Inc.
   —      (526 )    —      (526 )
Diligent Delivery Systems
   —      (550 )    —      (550 )
Horizon Facilities Service, Inc.
   —      (584 )    —      (584 )
Brunswick Bowling Products, Inc.
   —      (1,100 )    —      (1,100 )
Frontier Packaging, Inc.
   —      (1,145 )    —      (1,145 )
Educators Resource, Inc.
   —      (1,627 )    —      (1,627 )
Ginsey Home Solutions
   —      (2,372 )    —      (2,372 )
PSI Molded Plastics, Inc.
   —      (2,532 )    —      (2,532 )
SBS Industries Holdings, Inc.
   —      (4,358 )    —      (4,358 )
Other, net (<$1.0 million, net)
   596    (854 )    —      (258 )








Total
   $ 34,005    $ (852 )    $ (26,147 )    $ 7,006

The primary drivers of net unrealized depreciation of $27.0 million for the three months ended December 31, 2019 were the reversal of previously recorded unrealized appreciation of our investment in Nth Degree upon its exit, a decline in performance of certain of our other portfolio companies, and a decrease in comparable multiples used to estimate the fair value of certain of our portfolio companies, which were partially offset by the reversal of previously recorded unrealized depreciation of our investment in ~~B-Dry~~ ~~upon its exit and increased performance of certain of our portfolio companies.~~

Across our entire investment portfolio, we recorded ~~$0.6 million of~~ net unrealized ~~depreciation~~appreciation of $1.5 million and $26.0 million on our debt ~~positions~~ and ~~$0.5 million of net unrealized appreciation~~ on our equity positions, respectively, for the three months ended ~~December 31, 2020.~~September 30, 2021. As of ~~December 31, 2020,~~September 30, 2021, the fair value of our investment portfolio was ~~less~~more than the cost basis by ~~$47.0~~$45.3 million, as compared to ~~September~~June 30, ~~2020,~~2021, when the fair value of our investment portfolio was ~~less~~more than the cost basis by ~~$46.9~~$17.8 million, representing net unrealized ~~depreciation~~appreciation of ~~$0.1~~$27.5 million for the three months ended ~~December 31, 2020.~~September 30, 2021. Our entire portfolio had a fair value of ~~92.9%~~106.6% of cost as of ~~December 31, 2020.~~

~~Net Unrealized (Appreciation) Depreciation on Other~~

During the three months ended December 31, 2020, we did not record any unrealized appreciation or depreciation of other. During the three months ended December 31, 2019, we recorded net unrealized depreciation of other of $0.2 million related to the Credit Facility recorded at fair value.

52September 30, 2021.

Comparison of the ~~Nine~~Six Months Ended ~~December 31, 2020~~September 30, 2021 to the ~~Nine~~Six Months Ended ~~December 31, 2019~~September 30, 2020


	For the Nine Months Ended December 31,												For the Six Months Ended September 30,
	2020			2019			$ Change			% Change			2021			2020			$ Change			% Change
INVESTMENT INCOME
Interest income	$	34,513		$	38,144		$	(3,631	)		(9.5	)%	$	30,290		$	22,365		$	7,925			35.4	%
Dividend and success fee income		5,406			11,798			(6,392	)		(54.2	)		6,274			182			6,092			NM

Total investment income		39,919			49,942			(10,023	)		(20.1	)		36,564			22,547			14,017			62.2

EXPENSES
Base management fee		8,961			9,285			(324	)		(3.5	)		6,897			5,845			1,052			18.0
Loan servicing fee		5,242			5,139			103			2.0			3,662			3,456			206			6.0
Incentive fee		3,454			6,042			(2,588	)		(42.8	)		19,599			(302	)		19,901			NM
Administration fee		1,218			1,106			112			10.1			970			836			134			16.0
Interest and dividend expense		9,615			9,499			116			1.2			7,688			6,232			1,456			23.4
Amortization of deferred financing costs and discounts		1,291			1,119			172			15.4			908			840			68			8.1
Other		3,178			3,942			(764	)		(19.4	)		2,822			2,360			462			19.6

Expenses before credits from Adviser		32,959			36,132			(3,173	)		(8.8	)		42,546			19,267			23,279			120.8
Credits to fees from Adviser		(7,836	)		(7,786	)		(50	)		0.6			(5,843	)		(5,261	)		(582	)		11.1

Total expenses, net of credits to fees		25,123			28,346			(3,223	)		(11.4	)		36,703			14,006			22,697			162.1

NET INVESTMENT INCOME		14,796			21,596			(6,800	)		(31.5	)
NET INVESTMENT (LOSS) INCOME														(139	)		8,541			(8,680	)		(101.6	)

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments		10,479			55,682			(45,203	)		(81.2	)		2,393			1,374			1,019			74.2
Net unrealized depreciation of investments		(3,335	)		(46,900	)		43,565			92.9
Net unrealized appreciation of other		—			(10	)		10			100.0
Net realized loss on other														(1,998	)		—			(1,998	)		NM
Net unrealized appreciation (depreciation) of investments														75,018			(3,246	)		78,264			NM

Net realized and unrealized (loss) gain		7,144			8,772			(1,628	)		(18.6	)
Net realized and unrealized gain (loss)														75,413			(1,872	)		77,285			NM

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	21,940		$	30,368		$	(8,428	)		(27.8	)%	$	75,274		$	6,669		$	68,605			NM

BASIC AND DILUTED PER COMMON SHARE:
Net investment income	$	0.45		$	0.66		$	(0.21	)		(31.8	)
Net investment (loss) income													$	—		$	0.26		$	(0.26	)		(100.0	)

Net increase in net assets resulting from operations	$	0.66		$	0.93		$	(0.27	)		(29.0	)%	$	2.27		$	0.20		$	2.07			NM	%

NM = Not Meaningful

Investment Income

Total investment income ~~decreased 20.1%~~increased 62.2% for the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period. The ~~decrease~~increase was due to ~~a decrease~~increases in both interest income and dividend and success fee ~~income, as well as a decrease in interest~~ income.

Interest income from our investments in debt securities ~~decreased 9.5%~~increased 35.4% for the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period. During the ~~nine~~six months ended ~~December 31, 2019,~~September 30, 2021, we received ~~$2.1~~$3.9 million of past due interest ~~upon the exit of our investment in Alloy Die Casting Co. (“ADC”).~~from certain loans that were previously on non-accrual status. Generally, the level of interest income from investments is directly related to the principal balance of our interest-bearing investment portfolio outstanding during the period, multiplied by the weighted-average yield. The weighted-average principal balance of our interest-bearing investment portfolio during the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 was ~~$383.7~~$445.7 million, compared to ~~$373.3~~$373.5 million for the prior year period. This increase was primarily due to $79.5 million of loans returned to accrual status, the origination of ~~$93.8~~$54.2 million of new debt investments, and ~~$81.9~~$48.5 million of follow-on debt investments to existing portfolio companies, partially offset by ~~$109.2~~$64.2 million of loans placed on non-accrual status and $43.3 million of pay-offs, restructurings, or write-offs of debt investments ~~and $47.9 million of loans placed~~ ~~on non-accrual status~~after March 31, ~~2019,~~2020, and their respective impact on the weighted-average principal balance when considering timing of new investments, pay-offs, restructurings, write-offs, and accrual status changes, as applicable. The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend, success fee, and other income, was ~~11.9%~~13.6% for the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, compared to ~~13.5%~~11.9% for the prior year period. The weighted-average yield may vary from period to period, based on the current stated interest rate on interest-bearing investments.

As of ~~December 31,~~September 30, 2021, our loans to J.R. Hobbs, The Mountain, and SBS were on non-accrual status, with an aggregate debt cost basis of $81.3 million. As of September 30, 2020, our loans to B+T, Horizon, The Mountain, PSI Molded, and SOG were on non-accrual status, with an aggregate debt cost basis of ~~$95.1~~$94.9 million. ~~As of December 31, 2019, certain of our loans to Meridian, The Mountain, PSI Molded, and SOG were on~~ ~~non-accrual~~ ~~status, with an aggregate debt cost basis of $56.4 million.~~

Dividend and success fee income for the ~~nine~~six months ended ~~December 31, 2020 decreased 54.2%~~September 30, 2021 increased by $6.1 million from the prior year period. During the ~~nine~~six months ended ~~December 31,~~September 30, 2021, dividend and success fee income consisted of $4.7 million of success fee income and $1.6 million of dividend income. During the six months ended September 30, 2020, dividend and success fee income consisted of $5.0 million of dividend income and $0.4 million of success fee income. During the nine months ended December 31, 2019, dividend and success fee income consisted of $9.4 million of dividend income and $2.4$0.2 million of success fee income.

As of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, no single investment represented greater than 10% of the total investment portfolio at fair value.

Expenses

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, ~~decreased 11.4%~~increased 162.1% during the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period, primarily due to ~~a decrease~~an increase in the incentive fee, ~~other expenses,~~as well as increases in interest and dividend expense, and the base management ~~fee.~~fee, partially offset by an increase in credits to fees from the Adviser.

In accordance with GAAP, we recorded a ~~$1.5~~$15.9 million capital gains-based incentive fee during the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, compared to a $0.3 million reversal of the capital gains-based incentive fee ~~of $1.7 million~~ during the ~~nine~~six months ended ~~December 31, 2019.~~September 30, 2020. The capital gains-based incentive fee was a result of the net impact of net realized gains (losses) and net unrealized appreciation (depreciation) on investments during the respective periods. The income-based incentive fee ~~decreased~~increased by ~~$2.3~~$3.7 million for the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period, as the ~~decrease~~increase in pre-incentive fee net investment income more than offset the ~~decrease~~increase in net assets, which drives the hurdle rate.


	Nine Months Ended December 31,						Six Months Ended September 30,
	2020			2019			2021			2020
Average total assets subject to base management fee^(A)	$	597,400		$	619,000		$	689,700		$	584,500
Multiplied by prorated annual base management fee of 2.0%		1.5	%		1.5	%		1.0	%		1.0	%

Base management fee^(B)		8,961			9,285			6,897			5,845
Credits to fees from Adviser - other^(B)		(2,594	)		(2,647	)		(2,181	)		(1,805	)

Net base management fee	$	6,367		$	6,638		$	4,716		$	4,040

Loan servicing fee^(B)		5,242			5,139			3,662			3,456
Credits to base management fee - loan servicing fee^(B)		(5,242	)		(5,139	)		(3,662	)		(3,456	)

Net loan servicing fee	$	—		$	—		$	—		$	—

Incentive fee – income-based	$	2,002		$	4,338		$	3,695		$	—
Incentive fee – capital gains-based^(C)		1,452			1,704			15,904			(302	)

Total incentive fee^(B)	$	3,454		$	6,042		$	19,599		$	(302	)
Credits to fees from Adviser - other^(B)		—			—			—			—

Net total incentive fee	$	3,454		$	6,042		$	19,599		$	(302	)

^(A)

^(B)	Reflected as a line item on our Consolidated Statement of Operations.

^(C)	The capital gains-based incentive fees are recorded in accordance with GAAP and do not necessarily reflect amounts contractually due under the terms of the Advisory Agreement.

Interest and dividend expense increased ~~1.2%~~23.4% during the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, as compared to the prior year period, primarily due to the increase in ~~dividend~~interest expense ~~which was~~ partially offset by a decrease in ~~interest~~dividend expense. ~~Dividend~~Interest expense increased by ~~$0.3~~$3.4 million ~~as a result~~primarily due to the issuance of the ~~Series E ATM Program sales during~~2026 Notes in March 2021 and the ~~current fiscal year. Interest expense decreased by $0.2 million due to a decrease~~2028 Notes in ~~the effective interest rate,~~August 2021, which was partially offset by ~~a higher weighted-average balance outstanding on~~lower interest expense related to the Credit Facility. The weighted-average balance outstanding on the Credit Facility during the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 was ~~$88.7~~$25.4 million, as compared to ~~$45.8~~$80.5 million in the prior year period. The effective interest rate on the Credit Facility, excluding the impact of deferred financing costs, during the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 was ~~4.2%~~9.6%, as compared to ~~8.6%~~4.5% in the prior year period. The ~~decrease~~increase in the effective interest rate on the Credit Facility was primarily a result of ~~a decrease~~an increase in unused commitment fees on the undrawn portion of the Credit ~~Facility and~~Facility. Dividend expense decreased by $2.0 million as a ~~decrease in LIBOR. Refer to~~ ~~“Liquidity and Capital Resources — Revolving Line of Credit”~~ ~~for further discussion~~result of the ~~Credit Facility.~~

546.25% Series D Cumulative Term Preferred Stock (“Series D Term Preferred Stock”) and 6.375% Series E Cumulative Term Preferred Stock (“Series E Term Preferred Stock”) redemptions in March 2021 and August 2021, respectively, partially offset by the Series E ATM Program sales during the prior fiscal year.

Other expenses decreased 19.4% during the nine months ended December 31, 2020, as compared to the prior year period, primarily due to a decrease in bad debt expense, professional fees, and tax expense.

Realized and Unrealized Gain (Loss)

Net Realized Gain on Investments

During the ~~nine~~six months ended ~~December 31,~~September 30, 2021, we recorded net realized gains on investments of $2.4 million, primarily related to a $3.6 million realized gain from the exit of Head Country and $0.5 million realized gains related to previous exits of certain investments, partially offset by a $1.8 million realized loss from the dissolution of CTG. During the six months ended September 30, 2020, we recorded net realized gains on investments of ~~$10.5~~$1.4 million related to previous exits of certain investments.

Net Realized Gain (Loss) on Other

During the six months ended September 30, 2021, we recorded a net realized loss on other of $2.0 million which primarily related to ~~a $14.0 million realized gain from~~unamortized deferred issuance costs written off upon the ~~exit~~redemption of ~~Frontier, a $3.3 million realized gain from the recapitalization of Old World, and gains from previous exits, partially offset by an $8.5 million realized loss related to the partial~~ ~~write-off~~ ~~of a debt investment~~our Series E Term Preferred Stock in ~~SBS Industries.~~August 2021. During the ~~nine~~six months ended ~~December 31, 2019, we recorded net~~September 30, 2020, there were no realized gains or losses on investments of $55.7 million, primarily related to a $47.9 million realized gain from the exit of Nth Degree, a $20.4 million realized gain from the exit of ADC and a $3.2 million realized gain from the exit of Jackrabbit Inc. (“Jackrabbit”), which were partially offset by a $2.7 million realized loss from the exit of Tread Corporation (“Tread”) and a $14.5 million realized loss from the exit of ~~B-Dry.~~other.

Net Unrealized Appreciation (Depreciation) of Investments

During the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, we recorded net unrealized ~~depreciation~~appreciation of investments of ~~$3.3~~$75.0 million. The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 were as follows:


	Nine Months Ended December 31, 2020												Six Months Ended September 30, 2021
Portfolio Company	Realized Gain (Loss)			Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation			Net Gain (Loss)			Realized Gain (Loss)			Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation			Net Gain (Loss)
B+T Group Acquisition, Inc.													$	—		$	15,268		$	—		$	15,268
Old World Christmas, Inc.														—			12,636			—			12,636
Schylling, Inc.														—			10,522			—			10,522
Educators Resource, Inc.														—			8,811			—			8,811
Basset Creek Services, Inc.														—			8,487			—			8,487
SOG Specialty Knives and Tools, LLC														—			7,580			—			7,580
Counsel Press, Inc.														—			7,045			—			7,045
Horizon Facilities Service, Inc.														—			6,417			—			6,417
ImageWorks Display and Marketing Group, Inc.														—			5,302			—			5,302
PSI Molded Plastics, Inc.														—			3,633			—			3,633
Brunswick Bowling Products, Inc.														—			3,498			—			3,498
Galaxy Tool Holding Corporation														—			1,404			—			1,404
Mason West, LLC														—			1,172			—			1,172
Head Country, Inc.														3,627			—			(2,469	)		1,158
The Maids International, LLC														—			1,054			—			1,054
Channel Technologies Group, LLC														(1,841	)		—			1,841			—
Pioneer Square Brands, Inc.	$	—		$	20,635		$	—		$	20,635			—			(1,244	)		—			(1,244	)
Frontier Packaging, Inc.		14,032			2,534			(11,869	)		4,697
J.R. Hobbs Co. – Atlanta, LLC														—			(2,511	)		—			(2,511	)
SBS Industries Holdings, Inc.														—			(3,167	)		—			(3,167	)
Ginsey Home Solutions, Inc.		—			4,151			—			4,151			—			(4,305	)		—			(4,305	)
SOG Specialty Knives and Tools, LLC		—			3,964			—			3,964
Educators Resource, Inc.		—			3,335			—			3,335
Old World Christmas, Inc.		3,289			37			—			3,326
Diligent Delivery Systems		—			2,409			—			2,409
Galaxy Technologies, Inc.		—			2,173			—			2,173
Head Country, Inc.		—			1,762			—			1,762
Schylling, Inc.		—			1,069			—			1,069
Cambridge Sound Management, Inc.		740			—			—			740
ImageWorks Display and Marketing Group, Inc.		—			(1,312	)		—			(1,312	)
Bassett Creek Services, Inc.		—			(1,359	)		—			(1,359	)
Counsel Press, Inc.		—			(1,850	)		—			(1,850	)
Nth Degree, Inc.		113			(3,649	)		—			(3,536	)
PSI Molded Plastics, Inc.		—			(3,755	)		—			(3,755	)
D.P.M.S., Inc.		—			(4,442	)		—			(4,442	)
SBS Industries Holdings, Inc.		(8,470	)		1,580			—			(6,890	)
Brunswick Bowling Products, Inc.		—			(18,048	)		—			(18,048	)
Galaxy Technologies Holdings, Inc.														—			(6,320	)		—			(6,320	)
Other, net (<$1.0 million, net)		775			(700	)		—			75			607			312			52			971

Total	$	10,479		$	8,534		$	(11,869	)	$	7,144		$	2,393		$	75,594		$	(576	)	$	77,411

The primary drivers of net unrealized ~~depreciation~~appreciation of ~~$3.3~~$75.0 million for the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 were the increased performance of certain portfolio companies, the reversal of previously recorded unrealized depreciation of our investment in CTG upon its dissolution, and an increase in comparable transaction multiples used to estimate the fair value of certain of our portfolio companies, which were partially offset by the reversal of previously recorded unrealized appreciation of our investment in ~~Frontier upon its exit,~~Head Country and a decline in performance of certain other portfolio companies. In part, the performance of certain of our portfolio companies was driven by the impact COVID-19 has had or is expected to have on our portfolio companies and the markets in which they operate, including government restrictions on the portfolio companies’ ability to operate under historical conditions, current and future shutdowns and reopening restrictions, as well as demand for their products and general economic outlook, or the reversal of such impact towards pre-COVID-19 levels.

During the six months ended September 30, 2020, we recorded net unrealized depreciation of investments of $3.2 million. The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the six months ended September 30, 2020 were as follows:


	Six Months Ended September 30, 2020
Portfolio Company	Realized Gain (Loss)		Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation		Net Gain (Loss)
Pioneer Square Brands, Inc.	$	—	$	16,215		$	—	$	16,215
Ginsey Home Solutions, Inc.		—		3,670			—		3,670
Frontier Packaging, Inc.		—		2,534			—		2,534
SOG Specialty Knives and Tools, LLC		—		2,159			—		2,159
Galaxy Tool Holding Corporation		—		1,798			—		1,798
Head Country, Inc.		—		846			—		846
Cambridge Sound Management, Inc.		740		—			—		740
B+T Group Acquisition, Inc.		—		(588	)		—		(588	)
Horizon Facilities Services, Inc.		—		(1,415	)		—		(1,415	)
Bassett Creek Services, Inc.		—		(1,828	)		—		(1,828	)
Counsel Press, Inc.		—		(1,980	)		—		(1,980	)
D.P.M.S., Inc.		—		(2,637	)		—		(2,637	)
Nth Degree, Inc.		113		(3,649	)		—		(3,536	)
PSI Molded Plastics, Inc.		—		(4,215	)		—		(4,215	)
Brunswick Bowling Products, Inc.		—		(13,222	)		—		(13,222	)
Other, net (<$1.0 million, net)		521		(934	)		—		(413	)

Total	$	1,374	$	(3,246	)	$	—	$	(1,872	)

The primary drivers of net unrealized depreciation of $3.2 million for the six months ended September 30, 2020 were a decline in performance of certain portfolio companies, and a decrease in comparable multiples used to estimate the fair value of certain of our portfolio companies, which were partially offset by increased performance of certain of our other portfolio companies. In part, the performance of certain of our portfolio companies was driven by the impact COVID-19 has had or is expected to have on our portfolio companies and the markets in which they operate, including government restrictions on the portfolio companies’ ability to operate under historical conditions, current and future shutdowns and reopening restrictions, as well as demand for their products and general economic outlook.

During the nine months ended December 31, 2019, we recorded net unrealized depreciation of investments of $46.9 million. The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the nine months ended December 31, 2019 were as follows:

   Nine Months Ended December 31, 2019
Portfolio Company
   Realized
Gain
(Loss)    Unrealized
Appreciation
(Depreciation)    Reversal of
Unrealized
(Appreciation)
Depreciation    Net Gain
(Loss)
Nth Degree, Inc.
   $ 47,861    $ 12,689    $ (40,846 )    $ 19,704
Alloy Die Casting Co.
   20,355    8,823    (12,634 )    16,544
Counsel Press, Inc.
   —      7,321    —      7,321
Galaxy Tool Holding Corporation
   —      5,329    —      5,329
D.P.M.S., Inc.
   —      3,740    —      3,740
Old World Christmas, Inc.
   —      3,649    —      3,649
ImageWorks Display and Marketing Group, Inc.
   —      2,019    —      2,019
Head Country, Inc.
   —      1,423    —      1,423
Tread Corporation
   (2,726 )    —      3,380    654
Drew Foam Companies, Inc.
   565    —      —      565
B-Dry, LLC
   (14,452 )    —      14,699    247
The Mountain Corporation
   —      (796 )    —      (796 )
Pioneer Square Brands, Inc.
   —      (1,092 )    —      (1,092 )
Frontier Packaging, Inc.
   —      (1,303 )    —      (1,303 )
Jackrabbit, Inc.
   3,198    —      (4,547 )    (1,349 )
SOG Specialty Knives and Tools, LLC
   —      (2,305 )    —      (2,305 )
Brunswick Bowling Products, Inc.
   —      (2,419 )    —      (2,419 )
PSI Molded Plastics, Inc.
   —      (3,668 )    —      (3,668 )
Educators Resource, Inc.
   —      (3,743 )    —      (3,743 )
Meridian Rack & Pinion, Inc.
   —      (5,796 )    —      (5,796 )
Ginsey Home Solutions, Inc.
   —      (5,926 )    —      (5,926 )
SBS Industries Holdings, Inc.
   —      (6,387 )    —      (6,387 )
J.R. Hobbs Co. – Atlanta, LLC
   —      (17,822 )    —      (17,822 )
Other, net (<$1.0 million, net)
   881    (556 )    (132 )    193








Total
   $ 55,682    $ (6,820 )    $ (40,080 )    $ 8,782

The primary drivers of net unrealized depreciation of $46.9 million for the nine months ended December 31, 2019 were the reversal of previously recorded unrealized appreciation of our investments in Nth Degree, ADC, and Jackrabbit upon their exit, a decline in performance of certain portfolio companies, and a decrease in comparable multiples used to estimate the fair value of certain of our portfolio companies, which were partially offset by the reversal of previously recorded unrealized depreciation of our investment in ~~B-Dry~~ ~~and Tread upon their exit and increased performance of certain of our other portfolio companies.~~

Across our entire investment portfolio, we recorded net unrealized ~~depreciation~~appreciation of ~~$1.4~~$7.4 million and ~~$1.9~~$67.6 million on our debt and on our equity positions, respectively, for the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021. As of ~~December 31, 2020,~~September 30, 2021, the fair value of our investment portfolio was ~~less~~more than the cost basis by ~~$47.0~~$45.3 million, as compared to March 31, ~~2020,~~2021, when the fair value of our investment portfolio was less than the cost basis by ~~$43.7~~$29.7 million, representing net unrealized ~~depreciation~~appreciation of ~~$3.3~~$75.0 million for the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021. Our entire portfolio had a fair value of ~~92.9%~~106.6% of cost as of ~~December 31, 2020.~~

~~Net Unrealized (Appreciation) Depreciation on Other~~

During the nine months ended December 31, 2020, we did not record any unrealized appreciation or depreciation of other. During the nine months ended December 31, 2019, we recorded net unrealized appreciation of other of $10 related to the Credit Facility recorded at fair value.

56September 30, 2021.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Net cash used in operating activities for the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 was ~~$32.6~~$6.3 million, as compared to net cash ~~provided by~~used in operating activities of ~~$86.3~~$59.4 million for the ~~nine~~six months ended ~~December 31, 2019.~~September 30, 2020. This change was primarily due to ~~decreases~~a decrease in purchases of investments, an increase in principal repayments of investments and net proceeds from the sale of investments, ~~partially offset by~~as well as a ~~decline~~decrease in ~~purchases of investments.~~tax payments for our deemed distributions declared in prior fiscal years.

Purchases of investments were ~~$89.6~~$47.6 million during the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, compared to ~~$95.3~~$57.4 million during the ~~nine~~six months ended ~~December 31, 2019.~~September 30, 2020. Principal repayments and net proceeds from the sale of investments totaled ~~$51.2~~$22.2 million during the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, compared to ~~$167.0~~$2.1 million during the ~~nine~~three months ended ~~December 31, 2019.~~September 30, 2020.

As of ~~December 31,~~September 30, 2021, we had equity investments in or loans to 27 portfolio companies with an aggregate cost basis of $691.2 million. As of September 30, 2020, we had equity investments in or loans to 2829 portfolio companies with an aggregate cost basis of ~~$657.9~~$655.9 million. ~~As of December 31, 2019, we had equity investments in or loans to 28 portfolio companies with an aggregate cost basis of $573.3 million.~~

The following table summarizes our total portfolio investment activity during the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 and ~~2019:~~2020:


	Nine Months Ended December 31,						Six Months Ended September 30,
	2020			2019			2021			2020
Beginning investment portfolio, at fair value	$	565,924		$	624,172		$	633,829		$	565,924
New investments		46,902			43,180			34,200			46,902
Disbursements to existing portfolio companies		42,669			52,124			13,350			10,480
Unscheduled principal repayments		(20,734	)		(79,216	)		(14,060	)		(8,000	)
Net proceeds from sales of investments		(29,410	)		(87,060	)		(7,648	)		(3,107	)
Net realized gain on investments		8,858			54,522			1,805			—
Net unrealized appreciation (depreciation) of investments		8,534			(6,820	)		75,594			(3,246	)
Reversal of net unrealized appreciation of investments		(11,869	)		(40,080	)		(576	)		—
Amortization of premiums, discounts, and acquisition costs, net		14			14			9			9

Ending investment portfolio, at fair value	$	610,888		$	560,836		$	736,503		$	608,962


		Amount				Amount
For the remaining three months ending March 31:	2021	$	9,050
For the remaining six months ending March 31:					2022	$	30,460
For the fiscal years ending March 31:	2022		39,720		2023		114,850
	2023		106,150		2024		93,055
	2024		116,851		2025		171,777
	2025		164,277		2026		52,250
	Thereafter		52,250		Thereafter		52,246

	Total contractual repayments	$	488,298		Total contractual repayments	$	514,638
	Adjustments to cost basis of debt investments		(35	)	Adjustments to cost basis of debt investments		(21	)
	Investments in equity securities		169,618		Investments in equity securities		176,602

	Total cost basis of investments held as of December 31, 2020:	$	657,881		Total cost basis of investments held as of September 30, 2021:	$	691,219

Financing Activities

Net cash provided by financing activities for the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 was ~~$31.2~~$6.3 million, which consisted primarily of ~~$34.8~~$134.6 million in gross proceeds from the issuance of our 2028 Notes, partially offset by the redemption of our Series E Term Preferred Stock of $94.4 million, $16.9 million in distributions to common stockholders, $13.5 million of net repayments under the Credit Facility, and $3.4 million of deferred financing and offering costs.

Net cash provided by financing activities for the six months ended September 30, 2020 was $57.9 million, which consisted primarily of $67.4 million of net borrowings under the Credit Facility, ~~$19.3~~$6.3 million of gross proceeds from the issuance of mandatorily redeemable preferred stock under the Series E ATM Program, and $1.7 million of gross proceeds from the issuance of common stock under the Common Stock ATM Program, partially offset by ~~$23.9~~$16.9 million in distributions to common stockholders.

Net cash used in financing activities for the nine months ended December 31, 2019 was $75.9 million, which consisted primarily of $48.8 million of net repayments on the Credit Facility and $27.0 million in distributions to common stockholders.

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, among other requirements, to distribute to our stockholders on an annual basis 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”), determined without regard to the dividends paid deduction. Additionally, the Credit Facility generally restricts the amount of distributions to stockholders that we can pay out to be no greater than the sum of certain amounts, including our net investment income, plus net capital gains, plus amounts elected by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code. In accordance with these requirements, our Board of Directors declared, and we paid, monthly cash distributions of $0.07 per common share for each of the ~~nine~~six months from April through ~~December 2020,~~September 2021, and a supplemental ~~distribution~~distributions of ~~$0.09~~$0.06 and $0.03 per common share in June ~~2020.~~and September 2021, respectively. See also “Recent Developments—Distributions and Dividends” for a discussion of cash distributions to common stockholders declared by our Board of Directors in October 2021.

For the fiscal year ended March 31, ~~2020,~~2021, Investment Company Taxable Income exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat ~~$17.9~~$16.1 million of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year. In addition, for the fiscal year ended March 31, ~~2020,~~2021, net capital gains exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat ~~$5.3~~$8.5 million of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year. For the year ended March 31, ~~2020,~~2021, we recorded ~~$6.5 million of net adjustments for estimated permanent~~ ~~book-tax~~ differences to reflect tax character, which decreased Capital in excess of par value and increased Accumulated net realized gain in excess of distributions and Underdistributed (overdistributed) net investment income. For the nine months ended December 31, 2020, we recorded $1.0$2.0 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and Accumulated net realized gain in excess of distributions and increased Underdistributed net investment income. For the six months ended September 30, 2021, we recorded $2.7 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and Overdistributed net investment income and increased Accumulated net realized gain in excess of distributions.

Preferred Stock Dividends

Our Board of Directors declared and we paid monthly cash dividends of ~~(i) $0.13020833 per share to holders of our Series D Term Preferred Stock for each of the nine months from April through December 2020 and (ii)~~ $0.1328125 per share to holders of our Series E Term Preferred Stock ~~for each of the nine months~~per month from April through ~~December 2020.~~July 2021 and $0.07968750 per share of our Series E Term Preferred Stock for the period from August 1, 2021 up to, but excluding, the redemption date of August 19, 2021. In accordance with GAAP, we treat these monthly dividends as an operating expense.

Dividend Reinvestment Plan

Our common stockholders who hold their shares through our 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 our common stock. Common stockholders who do not make such election will receive their distributions in cash. Any distributions reinvested under the plan will be taxable to a common stockholder to the same extent, and with the same character, as if the common stockholder had received the distribution in cash. The common stockholder generally will have an adjusted basis in the additional common shares purchased through the plan equal to the dollar amount that would have been received if the U.S. stockholder had received the dividend or distribution in cash. The additional common 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. The Computershare dividend reinvestment plan is not open to holders of our preferred stock.

Equity

Registration Statement

On ~~June 14, 2019,~~September 3, 2021, we filed a registration statement on Form N-2 (File No. ~~333-232124)~~333-259302), which the SEC declared effective on ~~July 24, 2019.~~October 15, 2021. The 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, including through concurrent, separate offerings of such securities. As of ~~December 31, 2020,~~the date of this report, we had the ability to issue up to ~~$275.5~~$300.0 million inof the securities registered under the registration statement.

Common Stock

In December 2019, we entered into equity distribution agreements with Wedbush Securities, Inc., Cantor Fitzgerald & Co., and Ladenburg Thalmann & Co., Inc. (each, a “Common Stock ATM Sales Agent”), under which we have the ability to issue and sell shares of our common stock, from time to time, through the Common Stock ATM Sales Agents, up to an aggregate offering price of $35.0 million in the Common Stock ATM Program. AsOn August 11, 2021, we terminated the equity distribution agreements with each of ~~December 31, 2020, we had remaining capacity to~~the Common Stock ATM Sales Agents.

We did not sell ~~up to $30.1 million~~any shares of our common stock under the Common Stock ATM ~~Program.~~

Program during the six months ended September 30, 2021. During the ~~three months~~year ended ~~June 30, 2020,~~March 31, 2021, we sold 155,560 shares of our common stock under the Common Stock ATM Program at a weighted-average gross price of $11.39 per share and raised approximately $1.8 million of gross proceeds. The weighted-average net price per share, after deducting commissions and offering costs borne by us, was $11.17 and resulted in total net proceeds of approximately $1.7 million. These sales were above our then current estimated NAV per share. We did not sell any shares of our common stock under the Common Stock ATM Program during the period from June 30, 2020 to December 31, 2020.

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. When our common stock is trading at a price below NAV per share, the 1940 Act places regulatory constraints on our ability to obtain additional capital by issuing common stock. Generally, the 1940 Act provides that we may not issue and sell our common stock at a price below our NAV per common share, other than to our then-existing common stockholders pursuant to a rights offering, without first obtaining approval from our stockholders and our independent directors and meeting other stated requirements. On ~~December 31, 2020,~~September 30, 2021, the closing market price of our common stock was ~~$10.09~~$13.87 per share, representing a ~~9.2% discount~~4.5% premium to our NAV per share of ~~$11.11~~$13.27 as of ~~December 31, 2020.~~

At our 2020 Annual Meeting of Stockholders held on August 20, 2020, our stockholders approved a proposal authorizing us with the subsequent approval of our Board of Directors, to issue and sell shares of our common stock at a price below our then current NAV per common share for a period of one year from the date of such approval, provided that the number of shares issued and sold pursuant to such authority does not exceed 25.0% of our then-outstanding common stock immediately prior to each such sale.September 30, 2021.

Term Preferred Stock

In August 2018, we completed a public offering of 2,990,000 shares of our Series E Term Preferred Stock at a public offering price of $25.00 per share. Gross proceeds totaled $74.8 million and net proceeds, after deducting underwriting discounts and offering costs borne by us, were $72.1 million. Total underwriting discounts and offering costs related to this offering were $2.7 million, which have been recorded as discounts to the liquidation value on our accompanying Consolidated Statements of Assets and Liabilities and ~~are being~~were amortized over the period ending August 31, 2025, the mandatory redemption ~~date.~~

~~Our~~date, prior to redemption in August 2021. Prior to redemption in August 2021, the Series E Term Preferred Stock ~~is not convertible into our common stock or any other security and provides~~provided for a fixed dividend equal to 6.375% per year, payable monthly (which equates to $6.0 million per year as of December 31, 2020). We are required to redeem all outstanding shares of our Series E Term Preferred Stock on August 31, 2025, for cash at a redemption price equal to $25.00 per share, plus an amount equal to accumulated but unpaid dividends, if any, to, but excluding, the date of redemption. In addition, two other potential mandatory redemption triggers are as follows: (1) upon the occurrence of certain events that would constitute a change in control of us, we would be required to redeem all of our outstanding Series E Term Preferred Stock, and (2) if we fail to maintain asset coverage as required by Sections 18 and 61 of the 1940 Act (which is currently 150%) and are unable to correct such failure within a specific amount of time, we are required to redeem a portion of our outstanding Series E Term Preferred Stock or otherwise cure the asset coverage redemption trigger (we may also redeem additional securities to cause asset coverage to be up to 200%). We may also voluntarily redeem all or a portion of our Series E Term Preferred Stock at our sole option at the redemption price at any time.monthly.

In August 2018, we used the proceeds from the initial issuance of our Series E Term Preferred Stock, along with borrowings under the Credit Facility, to voluntarily redeem all outstanding shares of our 6.750% Series B Cumulative Term Preferred Stock (our “Series B Term Preferred Stock”) and our 6.500% Series C Cumulative Term Preferred Stock (our “Series C Term Preferred Stock”), each of which had a liquidation preference of $25.00 per share. In connection with the voluntary redemption of our Series B Term Preferred Stock and our Series C Term Preferred Stock, we incurred a loss on extinguishment of debt of $1.7 million, which was recorded in Realized loss on other in our ~~Consolidated Statements of Operations~~ ~~and which was primarily comprised of unamortized deferred issuance costs at the time of redemption.~~

In May 2020, we entered into sales agreements with Wedbush Securities, Inc. and Virtu Americas LLC (each a “Series E ATM Sales Agent”), under which we have the ability to issue and sell shares of our Series E Term Preferred Stock, from time to time, through the Series E ATM Sales Agents, up to $50.0 million aggregate liquidation preference in the Series E ATM Program. AsOn August 10, 2021, we terminated our sales agreements with each of ~~December 31, 2020, we had remaining capacity to~~the Series E ATM Sales Agents.

We did not sell ~~up to $30.4 million~~any shares of our Series E Term Preferred Stock under the Series E ATM ~~Program.~~

Program during the six months ended September 30, 2021. During the ~~nine months~~year ended ~~December~~March 31, ~~2020,~~2021, we sold 784,853 shares of our Series E Term Preferred Stock under the Series E ATM Program with an aggregate liquidation preference of $19.6 million. The weighted-average gross price per share net of discounts was $24.56 and resulted in gross proceeds of approximately $19.3 million. After deducting commissions and offering costs borne by us, net proceeds totaled approximately $19.1 million.

In ~~September 2016,~~March 2021, we ~~completed~~used a ~~public offering~~portion of ~~2,300,000~~the proceeds from the issuance of our 2026 Notes, to voluntarily redeem all outstanding shares of our Series D Term Preferred Stock, atwhich had a ~~public offering price~~liquidation preference of $25.00 per share. Gross proceeds totaled $57.5 million and net proceeds, after deducting underwriting discounts and offering costs borne by us, were $55.4 million. Total underwriting discounts and offering costs related to this offering were $2.1In connection with the voluntary redemption, we incurred a loss on extinguishment of debt of $0.8 million, which ~~have been~~was recorded ~~as discounts to the liquidation value~~in Realized loss on other in our Consolidated Statements of ~~Assets and Liabilities~~Operations and ~~are being amortized over~~which was primarily comprised of unamortized deferred issuance costs at the ~~period ending September 30, 2023,~~time of redemption. Prior to redemption in March 2021, the ~~mandatory redemption date.~~

~~Our~~ Series D Term Preferred Stock ~~is not convertible into our common stock or any other security. Our Series D Term Preferred Stock provides~~provided for a fixed dividend equal to 6.25% per year, payable monthly, ~~(which equates~~and would have otherwise been subject to ~~$3.6 million per year). We are required~~mandatory redemption on September 30, 2023.

In August 2021, we used a portion of the proceeds from the issuance of our 2028 Notes, to voluntarily redeem all outstanding shares of our Series D Term Preferred Stock on September 30, 2023, for cash at a redemption price equal to $25.00 per share, plus an amount equal to accumulated but unpaid dividends, if any, to, but excluding, the date of redemption. In addition, two other potential mandatory redemption triggers are as follows: (1) upon the occurrence of certain events that would constitute a change in control of us, we would be required to redeem all of our outstanding Series D Term Preferred Stock, and (2) if we fail to maintain asset coverage of at least 200% and are unable to correct such failure within a specific amount of time, we are required to redeem a portion of our outstanding Series D Term Preferred Stock or otherwise cure the asset coverage redemption trigger (and we may also redeem additional securities to cause the asset coverage to be 240%). We may also voluntarily redeem all or a portion of our Series D Term Preferred Stock at our sole option at the redemption price at any time.

Each series of our mandatorily redeemable preferred stock has a preference over our common stock with respect to dividends, whereby no distributions are payable on our common stock unless the stated dividends, including any accrued and unpaid dividends, on the mandatorily redeemable preferred stock have been paid in full. The Series D Term Preferred Stock and Series E Term Preferred Stock, ~~are considered liabilities~~which had a liquidation preference of $25.00 per share. In connection with the voluntary redemption, we incurred a loss on extinguishment of debt of $2.0 million, which was recorded in ~~accordance with GAAP~~Realized loss on other in our accompanying Consolidated Statements of Operations and as such, affect our asset coverage, exposing us to additional leverage risks. The asset coverage on our senior securities that are stock (our Series D Term Preferred Stock and Series E Term Preferred Stock) aswhich was primarily comprised of ~~December 31, 2020 was 250.3%, calculated pursuant to Sections 18 and 61~~unamortized deferred issuance costs at the time of ~~the 1940 Act.~~redemption.

Revolving Line of Credit

On ~~August 22, 2018,~~March 8, 2021, we, through our wholly-owned subsidiary, Gladstone Business Investment, LLC (“Business Investment”), entered into Amendment No. 46 to the Fifth Amended and Restated Credit Agreement, originally entered into on April 30, 2013, ~~and as previously amended,~~ with KeyBank National Association (“KeyBank”) as administrative agent, lead arranger, managing agent and lender, the Adviser, as servicer, and certain other lenders party thereto. The revolving period was extended to ~~August 22, 2021,~~February 29, 2024, and if not renewed or extended by such date, all principal and interest will be due and payable on ~~August 22, 2023~~February 28, 2026 (two years after the revolving period end date). ~~Additionally,~~As of September 30, 2021, the Credit Facility ~~commitment amount was increased from $165.0 million to $200.0 million~~provided two one-year extension options that may be exercised on or before the first and second anniversary of March 8, 2021, subject to ~~certain terms and conditions, can be expanded~~approval by all lenders. Additionally, as part of this amendment, the COVID-19 Relief Period (described below) was extended to ~~a total facility amount of $300.0 million through additional commitments from existing or new lenders.~~September 30, 2021. We incurred fees of approximately ~~$1.6~~$1.0 million in connection with this amendment.

On August 10, 2020, we, through Business Investment, entered into Amendment No. 5 to the Credit Facility. Among other things, Amendment No. 5 ~~amends~~amended the Credit Facility to (i) add LIBOR replacement language; (ii) implement a 0.5% LIBOR floor; (iii) reduce the facility size from $200.0 million to $180.0 million, which may be expanded to $300.0 million through additional commitments; and (iv) provide certain other changes to existing terms and covenants. In addition, Amendment No. 5 ~~provides~~provided for certain temporary changes during the COVID-19 Relief Period ~~(which began on August~~(August 10, 2020 ~~and ends on~~until March 31, 2021, ~~and which may be extended,~~ subject to extension under certain conditions) including: (i) amending the definition of “Effective Advance Rate,” provided that during such period the overall effective advance rate does not exceed 55%; and (ii) removing or changing certain “Excess Concentration Limits” (as defined in the Credit Facility).

Advances under the Credit Facility generally bear interest at 30-day LIBOR, ~~LIBOR,~~ subject to a floor of 0.5%, plus 2.85% per annum until ~~August 21, 2021,~~February 29, 2024, with the margin then increasing to 3.10% for the period from ~~August 22, 2021~~February 29, 2024 to ~~August 21, 2022,~~February 28, 2025, and increasing further to 3.35% thereafter. The Credit Facility has an unused commitment fee on the daily unused commitment amount of 0.50% per annum if the average unused commitment amount for the period is less than or equal to 50% of the total commitment amount, 0.75% per annum if the average unused commitment amount for the period is greater than 50% but less than or equal to 65% of the total commitment amount, and 1.00% per annum if the average unused commitment amount for the period is greater than 65% of the total commitment amount.

Interest is payable monthly during the term of the Credit Facility. Available borrowings are subject to various constraints and applicable advance rates, which are generally based on the size, characteristics, and quality of the collateral pledged by Business Investment. The Credit Facility also requires that any interest and 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 a month.

Among other things, the Credit Facility contains covenants that require Business Investment to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions) and restrict certain material changes to our credit and collection policies without the lenders’ consent. The Credit Facility also generally seeks to restrict distributions to stockholders to the sum of (i) our net investment income, (ii) net capital gains, and (iii) amounts deemed by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code. Loans eligible to be pledged as collateral are subject to certain limitations, including, among other things, restrictions on geographic concentrations, industry concentrations, loan size, payment frequency and status, average life, portfolio company leverage, and lien property. The Credit Facility also requires Business Investment to comply with other financial and operational covenants, which obligate Business Investment to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of obligors required in the borrowing base. Additionally, the Credit Facility contains a performance guaranty that requires the Company to maintain (i) a minimum net worth (defined in the Credit Facility to include our mandatory redeemable term preferred stock) of the greater of $210.0 million or $210.0 million plus 50% of all equity and subordinated debt raised minus 50% of any equity or subordinated debt redeemed or retired after November 16, 2016, which equated to ~~$231.0~~$286.3 million as of ~~December 31, 2020,~~September 30, 2021, (ii) asset coverage with respect to senior securities representing indebtedness of at least 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), and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code. As of ~~December 31, 2020,~~September 30, 2021, and as defined in the performance guaranty of the Credit Facility, we had a net worth of ~~$517.0~~$695.2 million, asset coverage on our senior securities representing indebtedness of ~~671.0%~~254.5%, calculated in accordance with the requirements of Sections 18 and 61 of the 1940 Act, and an active status as a BDC and RIC. As of ~~December 31, 2020,~~September 30, 2021, we had availability, after adjustments for various constraints based on collateral quality, of ~~$96.0~~$171.1 million under the Credit Facility and were in compliance with all covenants under the Credit Facility.

Notes ~~Offering~~Payable

5.00% Notes due 2026

In ~~May 2020,~~March 2021, we ~~entered into~~completed a ~~dealer manager agreement (“Dealer Manager Agreement”)~~public offering of the 2026 Notes with ~~our affiliated dealer manager, Gladstone Securities, under which we may sell a maximum of $350.0 million~~an aggregate principal amount of $127.9 million, which resulted in net proceeds of approximately $123.8 million after deducting underwriting discounts, commissions and offering costs borne by us. The 2026 Notes are traded under the ticker symbol “GAINN” on Nasdaq. The 2026 Notes will mature on May 1, 2026 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 May 1, 2023. The 2026 Notes bear interest at a rate of 5.00% per year (which equates to $6.4 million per year), payable quarterly in arrears.

The 2026 Notes are recorded at the aggregate principal amount, less underwriting discounts, commissions, and offering costs, on our accompanying Consolidated Statements of Assets and Liabilities. Total underwriting discounts, commissions, and offering costs related to this offering were $4.1 million, which have been recorded as discounts to the aggregate principal amount on our accompanying Consolidated Statements of Assets and Liabilities and are being amortized over the period ending May 1, 2026, the maturity date.

4.875% Notes due ~~2040 (the “Notes”). However,~~2028

In August 2021, we ~~can only offer for sale up to $200.0 million~~completed a public offering of the 2028 Notes with an aggregate principal amount of ~~the~~$134.6 million, which resulted in net proceeds of approximately $131.3 million after deducting underwriting discounts, commissions and offering costs borne by us. The 2028 Notes ~~pursuant to a prospectus supplement dated May 22, 2020 and a base prospectus dated July 24, 2019 relating to the registration statement on~~ ~~Form N-2 (File No. 333-~~ ~~232124)~~are traded under the ~~Securities Act of 1933, as amended.~~

ticker symbol “GAINZ” on Nasdaq. The 2028 Notes will mature on November 1, ~~2040. We will pay~~2028 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, 2023. The 2028 Notes bear interest at a rate of 4.875% per year (which equates to $6.6 million per year), payable quarterly in arrears.

The indenture relating to the 2028 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 ~~Notes on~~Company’s asset coverage meets the ~~first day~~threshold specified in the 1940 Act at the time of ~~each month, commencing on~~(and giving effect to) such declaration or purchase, and (iii) if, at any time, we are not subject to the ~~first day~~reporting requirements of the ~~month following~~Exchange Act, we will provide the ~~issuance of such Note. Subject to certain limitations,~~ holders of the 2028 Notes, ~~will have~~as applicable, and the option to tender their Notes for redemption at a redemption price of $22.50 per Note until the earlier of the date upon which our Board of Directors, by resolution, suspends or terminates the optional redemption right of the holders or the date, if any, on which thetrustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.

The 2028 Notes are ~~listed~~recorded at the aggregate principal amount, less underwriting discounts, commissions, and offering costs, on ~~Nasdaq Global Select Market or another national securities exchange. In addition, we will repurchase the Notes, upon request, in the event~~our accompanying Consolidated Statements of ~~the holder’s death at a redemption price of $25.00 per Note. Except upon the occurrence of certain events that would constitute a change in control of us or~~Assets and Liabilities. Total underwriting discounts, commissions, and offering costs related to ~~comply with applicable law, we may not redeem the Notes at our option until the later of (1) the~~ ~~one-year~~ ~~anniversary of the termination of the~~this offering of the Notes and (2) July 1, 2025. After such date, we may, at our sole option, redeem all or a portion of the Notes at a redemption price of $25.00 per Note. The Notes will be our direct unsecured obligations and rank equal in right of payment with all outstanding and future unsecured, unsubordinated indebtedness issued by us. As of December 31, 2020, no Noteswere $3.3 million, which have been ~~issued.~~recorded as discounts to the aggregate principal amount on our accompanying Consolidated Statements of Assets and Liabilities and are being amortized over the period ending November 1, 2028, the maturity date.

OFF-BALANCE SHEET ARRANGEMENTS

Unlike PIK income, we generally do not recognize success fees as income until payment has been received. Due to the contingent nature of success fees, there are no guarantees that we will be able to collect any or all of these success fees or know the timing of any such collections. As a result, as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, we had unrecognized, contractual off-balance sheet success fee receivables of ~~$44.6~~$49.0 million and ~~$37.6~~$46.2 million (or approximately ~~$1.34~~$1.48 and ~~$1.14~~$1.39 per common share), respectively, on our debt investments. Consistent with GAAP, we have not recognized success fee receivables and related income in our accompanying Consolidated Financial Statements until earned.

CONTRACTUAL OBLIGATIONS

We have line of credit and delayed draw term loan commitments to certain of our portfolio companies that have not been fully drawn. Since these line of credit and delayed draw term loan commitments have expiration dates and we expect many will never be fully drawn, the total line of credit and delayed draw term loan commitment amounts do not necessarily represent future cash requirements. We estimate the fair value of the combined unused line of credit and delayed draw term loan commitments as of ~~December 31, 2020~~September 30, 2021 to be immaterial.

As of ~~December 31, 2020,~~September 30, 2021, we have also extended a guaranty on behalf of one of our portfolio companies, Country Club Enterprises, LLC (“CCE”), whereby we have guaranteed $1.0 million of CCE’s obligations. As of ~~December 31, 2020,~~September 30, 2021, we have not been required to make payments on this or any previous guaranties, and we consider the credit risks to be remote and the fair value of this guaranty to be immaterial.

The following table shows our contractual obligations as of ~~December 31, 2020,~~September 30, 2021, at cost/liquidation preference:


	Payments Due by Period										Payments Due by Period
Contractual Obligations^(A)	Total		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
Credit Facility^(B)	$	84,000	$	—	$	84,000	$	—	$	—	$	8,900	$	—	$	—	$	8,900	$	—
Mandatorily redeemable preferred stock		151,871		—		57,500		94,371		—
Notes payable												262,488		—		—		127,938		134,550
Secured borrowing		5,096		—		—		5,096		—		5,096		—		—		5,096		—
Interest payments on obligations^(C)		48,873		13,555		24,925		10,393		—		85,957		15,355		30,716		26,221		13,665

Total	$	289,840	$	13,555	$	166,425	$	109,860	$	—	$	362,441	$	15,355	$	30,716	$	168,155	$	148,215

^(A)	Excludes unused line of credit and delayed draw term loan commitments and guaranties to our portfolio companies in the aggregate principal amount of ~~$6.5~~$5.3 million.

^(B)	Principal balance of borrowings outstanding under the Credit Facility, based on the maturity date following the current contractual revolving period end date.

^(C)

Includes interest payments due on the Credit Facility, 2026 Notes, 2028 Notes, and secured borrowing, ~~and dividend obligations on each series of our mandatorily redeemable preferred stock.~~as applicable. The amount of interest payments calculated for purposes of this table was based upon rates and outstanding balances as of December 31, 2020. Dividend obligations on our mandatorily redeemable preferred stock assume quarterly declarations and monthly dividend payments through the date of mandatory redemption of each series.September 30, 2021.

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 to Consolidated Financial Statements included elsewhere in this Quarterly Report. Additionally, refer to Note 3 — Investments in the accompanying Notes to Consolidated 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 accompanying Notes 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, are 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 equity securities. For loans that have been rated by a 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 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 of Lower Middle Market companies do not exceed the grade of BBB on an NRSRO scale, so there would be no debt securities in the Lower 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.

The following table reflects risk ratings for all loans in our portfolio as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020:~~2021:


Rating	December 31, 2020		March 31, 2020		September 30, 2021		March 31, 2021
Highest		9.0		9.0		9.0		9.0
Average		6.2		6.5		6.6		6.2
Weighted-average		6.5		6.9		7.0		6.6
Lowest		3.0		4.0		4.0		4.0

Tax Status

We intend to continue to maintain our qualification as a RIC under Subchapter M of the Code for U.S. federal income tax purposes. As a RIC, we generally are not subject to U.S. federal income tax on the portion of our taxable income and gains distributed to our stockholders. To maintain our qualification as a RIC, we must maintain our status as a BDC and meet certain source-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 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. See “~~Business~~— Liquidity and Capital Resources — Distributions and Dividends to Stockholders.”

In an effort to limit federal excise taxes, we have to distribute to stockholders, during each calendar year, an amount close to the sum of: (1) 98% of our ordinary income for the calendar year, (2) 98.2% of our net capital gains (both long-term and short-term), if any, for the one-year period ending on October 31 of the calendar year, and (3) any income realized, but not distributed, in the preceding period (to the extent that income tax was not imposed on such amounts), less certain reductions, as applicable. Under the RIC Modernization Act, we are permitted to carryforward any capital losses that we may incur for an unlimited period, and such capital loss carryforwards will retain their character as either short-term or long-term capital losses. Our capital loss carryforward balance was $0 as of both ~~December 31, 2020~~ September 30, 2021and March 31, ~~2020.~~2021.

Recent Accounting Pronouncements

Refer to Note 2 — Summary of Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements included elsewhere in this Quarterly Report for a description of recent accounting pronouncements.

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, including COVID-19 or other health emergencies; 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 rates at which we borrow funds, such as under the Credit Facility (which is variable) and our ~~mandatorily redeemable preferred stock~~unsecured notes (which are fixed), and the rates 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 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.

We target to have approximately ~~10%~~90% of the loans in our portfolio ~~at fixed rates, with approximately 90%~~ at variable rates or variable rates with a floor ~~mechanism.~~mechanism, and up to approximately 10% at fixed rates. As of ~~December 31, 2020~~ September 30, 2021and March 31, ~~2020,~~2021, all of our variable-rate loans have rates associated with the current 30-day LIBOR rate and our total debt investment portfolio consisted of the following breakdown based on the principal balance:


Rates:	December 31, 2020			March 31, 2020			September 30, 2021			March 31, 2021
Variable rates with a floor		97.7	%		97.5	%		99.9	%		97.7	%
Fixed rates		2.3			2.5			0.1			2.3

Total		100.0	%		100	%		100.0	%		100.0	%

There have been no material changes in the quantitative and qualitative market risk disclosures during the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 from those included in our Annual Report.

ITEM 4. CONTROLS AND PROCEDURES.

a) Evaluation of Disclosure Controls and Procedures

As of ~~December 31, 2020~~September 30, 2021 (the end of the period covered by this report), we, including our chief executive officer and chief financial officer, evaluated the effectiveness, 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, 2020~~September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various investigations, 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 will be subject to various uncertainties and could result in the expenditure of significant financial and managerial resources. Further, we are not named as a party to any proceeding that involves a claim for damages that exceeds 10% of our consolidated current assets.

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 the section captioned “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2020,~~2021, as filed with the SEC on May ~~12, 2020.~~11, 2021. The risks described 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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

Issuer Purchases of Equity Securities

The following table provides information with respect to the purchases made by us of the Series E Term Preferred Stock during the second quarter of our fiscal year 2022. We elected to voluntarily redeem the entirety of the then issued and outstanding Series E Term Preferred Stock, pursuant to their terms, on August 19, 2021. On November 1, 2021, we filed a Certificate of Elimination of the Series E Term Preferred Stock with the Secretary of the State of Delaware, thereby removing the Certificate of Designation of the Series E Term Preferred Stock from our Amended and Restated Certificate of Incorporation.

We do not have any existing publicly announced repurchase plans or programs with respect to any class of our equity securities.


Period	(a) Total Number of Shares of Series E Term Preferred Stock Purchased		(b) Average Price Paid per Share of Series E Term Preferred Stock		(c) Total Number of Shares of Series E Term Preferred Stock Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number of Shares of Series E Term Preferred Stock that May Yet Be Purchased Under the Plans or Programs
July 1 through 31, 2021		—		—		—		—
August 1 through 31, 2021		3,774,853	$	25.00		—		—
September 1 through 30, 2021		—		—		—		—

Total		3,774,853	$	25.00		—		—

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Not applicable.

ITEM 6. EXHIBITS

See the exhibit index.

EXHIBIT INDEX


Exhibit		Description

~~3.1~~3.1a		Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit A.2 to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-123699), filed May 13, 2005.

~~3.1.a~~		~~Certificate of Designation of 6.25% Series D Cumulative Term Preferred Stock Due 2023, incorporated by reference to Exhibit 3.5 to the Registration Statement on Form~~ ~~8-A~~ ~~(File No.~~ ~~001-34007),~~ ~~filed September~~ ~~22, 2016.~~

3.1.b		Certificate of Designation of 6.375% Series E Cumulative Term Preferred Stock Due 2025, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00704), filed August 16, 2018.

3.1.c		Certificate of Increase of Shares Designated as 6.375% Series E Cumulative Term Preferred Stock due 2025 of Gladstone Investment Corporation incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00704), filed May 21, 2020.

3.2		Second Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00704), filed May 15, 2020.

3.3		Certificate of Elimination of 6.375% Series E Cumulative Term Preferred Stock Due 2025*

4.1		Specimen Stock Certificate, incorporated by reference to Exhibit d to Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-123699), filed June 21, 2005.

4.2		Specimen ~~6.25% Series D Cumulative Term Preferred Stock Due 2023 Stock Certificate, incorporated by reference to Exhibit 4.5 to the Registration Statement on Form~~ ~~8-A~~ ~~(File No.~~ ~~001-34007),~~ ~~filed September~~ ~~22, 2016.~~

~~4.3~~		~~Specimen~~ 6.375% Series E Cumulative Term Preferred Stock Due 2025 Stock Certificate incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 814-00704), filed August 16, 2018.

~~4.4~~4.3		Indenture, dated as of May 22, 2020, between Gladstone Investment Corporation and UMB Bank, National Association, as trustee incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 814-00704), filed May 22, 2020.

~~4.5~~4.4		~~First~~Second Supplemental Indenture ~~dated as of May~~ ~~22, 2020, relating to the 6.00% Notes due 2040,~~ between Gladstone Investment Corporation and UMB Bank, National Association, dated as ~~trustee~~of March 2, 2021, incorporated by reference to Exhibit ~~4.2~~4.1 to the Current Report on Form 8-K (File No. 814-00704), filed ~~May~~March ~~22, 2020.~~2, 2021.

~~4.6~~4.5		~~Form~~Third Supplemental Indenture between Gladstone Investment Corporation and UMB Bank, National Association, dated as of ~~6.00% Notes due 2040~~August 18, 2021, incorporated by reference to Exhibit ~~4.2~~4.1 to the Current Report on Form 8-K (File No. 814-00704), filed ~~May~~August ~~22, 2020 (contained in the First Supplemental Indenture filed as Exhibit 4.2 thereto).~~18, 2021.

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 and Treasurer 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 and Treasurer 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.

SIGNATURE

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 INVESTMENT CORPORATION

By:		/s/ Julia Ryan
		Julia Ryan
		Chief Financial Officer and Treasurer
		(principal financial and accounting officer)

Date: ~~February~~November 2, 2021

6766


	Level 3 – Borrowings
	Recurring Fair Value Measurements Reported in *Consolidated* *Statements of Assets and Liabilities* Using Significant Unobservable Inputs (Level 3)
	December 31, 2020		March 31, 2020
Credit Facility	$	84,000	$	49,200


Fair Value Measurements of Borrowings Using Significant Unobservable Inputs (Level 3) Reported in *Consolidated Statements of Assets and Liabilities*
	Credit Facility
Three Months Ended December 31, 2020:
Fair value at September 30, 2020	$	116,600
Borrowings		30,200
Repayments		(62,800	)
Unrealized depreciation		—

Fair value at December 31, 2020	$	84,000

Nine Months Ended December 31, 2020:
Fair value at March 31, 2020	$	49,200
Borrowings		111,700
Repayments		(76,900	)
Unrealized depreciation		—

Fair value at December 31, 2020	$	84,000


Fair Value Measurements of Borrowings Using Significant Unobservable Inputs (Level 3) Reported in *Consolidated Statements of Assets and Liabilities*
	Credit Facility
Three Months Ended December 31, 2019:
Fair value at September 30, 2019	$	46,964
Borrowings		31,400
Repayments		(74,000	)
Unrealized depreciation		(154	)

Fair value at December 31, 2019	$	4,210

Nine Months Ended December 31, 2019:
Fair value at March 31, 2019	$	53,000
Borrowings		131,400
Repayments		(180,200	)
Unrealized appreciation		10

Fair value at December 31, 2019	$	4,210


Record Date	Payment Date	Distribution per Common Share		Dividend per Share of Series D Term Preferred Stock		Dividend per Share of Series E Term Preferred Stock
January 22, 2021	January 29, 2021	$	0.07	$	0.13020833	$	0.13281250
February 17, 2021	February 26, 2021		0.07		0.13020833		0.13281250
March 18, 2021	March 31, 2021		0.07		0.13020833		0.13281250

	Total for the Quarter:	$	0.21	$	0.39062499	$	0.39843750


	Three Months Ended December 31, 2019
Portfolio Company	Realized Gain (Loss)			Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation			Net Gain (Loss)
Nth Degree, Inc.	$	47,861		$	1,926		$	(40,846	)	$	8,941
Galaxy Tool Holding Corporation		—			6,577			—			6,577
Old World Christmas, Inc.		—			2,447			—			2,447
Counsel Press, Inc.		—			2,152			—			2,152
Pioneer Square Brands, Inc.		—			1,694			—			1,694
B-Dry, LLC.		(14,452	)		—			14,699			247
B+T Group Acquisition, Inc.		—			(526	)		—			(526	)
Diligent Delivery Systems		—			(550	)		—			(550	)
Horizon Facilities Service, Inc.		—			(584	)		—			(584	)
Brunswick Bowling Products, Inc.		—			(1,100	)		—			(1,100	)
Frontier Packaging, Inc.		—			(1,145	)		—			(1,145	)
Educators Resource, Inc.		—			(1,627	)		—			(1,627	)
Ginsey Home Solutions		—			(2,372	)		—			(2,372	)
PSI Molded Plastics, Inc.		—			(2,532	)		—			(2,532	)
SBS Industries Holdings, Inc.		—			(4,358	)		—			(4,358	)
Other, net (<$1.0 million, net)		596			(854	)		—			(258	)

Total	$	34,005		$	(852	)	$	(26,147	)	$	7,006


	Nine Months Ended December 31, 2019
Portfolio Company	Realized Gain (Loss)			Unrealized Appreciation (Depreciation)			Reversal of Unrealized (Appreciation) Depreciation			Net Gain (Loss)
Nth Degree, Inc.	$	47,861		$	12,689		$	(40,846	)	$	19,704
Alloy Die Casting Co.		20,355			8,823			(12,634	)		16,544
Counsel Press, Inc.		—			7,321			—			7,321
Galaxy Tool Holding Corporation		—			5,329			—			5,329
D.P.M.S., Inc.		—			3,740			—			3,740
Old World Christmas, Inc.		—			3,649			—			3,649
ImageWorks Display and Marketing Group, Inc.		—			2,019			—			2,019
Head Country, Inc.		—			1,423			—			1,423
Tread Corporation		(2,726	)		—			3,380			654
Drew Foam Companies, Inc.		565			—			—			565
B-Dry, LLC		(14,452	)		—			14,699			247
The Mountain Corporation		—			(796	)		—			(796	)
Pioneer Square Brands, Inc.		—			(1,092	)		—			(1,092	)
Frontier Packaging, Inc.		—			(1,303	)		—			(1,303	)
Jackrabbit, Inc.		3,198			—			(4,547	)		(1,349	)
SOG Specialty Knives and Tools, LLC		—			(2,305	)		—			(2,305	)
Brunswick Bowling Products, Inc.		—			(2,419	)		—			(2,419	)
PSI Molded Plastics, Inc.		—			(3,668	)		—			(3,668	)
Educators Resource, Inc.		—			(3,743	)		—			(3,743	)
Meridian Rack & Pinion, Inc.		—			(5,796	)		—			(5,796	)
Ginsey Home Solutions, Inc.		—			(5,926	)		—			(5,926	)
SBS Industries Holdings, Inc.		—			(6,387	)		—			(6,387	)
J.R. Hobbs Co. – Atlanta, LLC		—			(17,822	)		—			(17,822	)
Other, net (<$1.0 million, net)		881			(556	)		(132	)		193

Total	$	55,682		$	(6,820	)	$	(40,080	)	$	8,782