Quarterly report pursuant to Section 13 or 15(d)

INVESTMENTS

v3.25.0.1
INVESTMENTS
 9 Months Ended
Dec. 31, 2024
Investments, Debt and Equity Securities [Abstract]  
INVESTMENTS INVESTMENTS
Fair Value
In accordance with ASC 820, the fair value of our investments is determined to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date.
•Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical financial instruments in active markets;
•Level 2 — inputs to the valuation methodology include quoted prices for similar financial instruments in active or inactive markets, and inputs that are observable for the financial instrument, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are 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, 2024, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Gladstone Alternative Income Fund ("Gladstone Alternative"), which was valued using NAV as a practical expedient. As of March 31, 2024, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in 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 three and nine months ended December 31, 2024 and 2023, respectively.
As of December 31, 2024 and March 31, 2024, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:
Fair Value Measurements
Fair Value
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
As of December 31, 2024:
Secured first lien debt
 $ 599,911  $ —  $ —  $ 599,911 
Secured second lien debt
 108,743  —  —  108,743 
Preferred equity
 308,226  —  —  308,226 
Common equity/equivalents (A)
50,350  — 

—  50,350 
Total Investments as of December 31, 2024
 $ 1,067,230  $ —  $ —  $ 1,067,230 
Fair Value Measurements
Fair Value
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
As of March 31, 2024:
Secured first lien debt
 $ 474,856  $ —  $ —  $ 474,856 
Secured second lien debt
 138,703  —  —  138,703 
Preferred equity
 213,480  —  —  213,480 
Common equity/equivalents
 93,465  —  18 
(B)
 93,447 
Total Investments as of March 31, 2024
 $ 920,504  $ —  $ 18  $ 920,486 
(A)Excludes our investment in Gladstone Alternative with a fair value of $5.0 million as of December 31, 2024. Gladstone Alternative was valued using NAV as a practical expedient.
(B)Fair value was determined based on the closing market price of shares of Funko, Inc. (our units in Funko could 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, 2024 and March 31, 2024, by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:
Total Recurring Fair Value Measurements
Reported in Consolidated Statements
of Assets and Liabilities
Valued Using Level 3 Inputs
December 31, 2024 March 31, 2024
Non-Control/Non-Affiliate Investments
Secured first lien debt $ 386,753  $ 324,348 
Secured second lien debt 92,854  93,340 
Preferred equity 210,624  162,522 
Common equity/equivalents(A)
50,350  42,005 
Total Non-Control/Non-Affiliate Investments 740,581  622,215 
Affiliate Investments
Secured first lien debt 212,654  147,603 
Secured second lien debt 15,889  45,363 
Preferred equity 97,602  50,958 
Common equity/equivalents(B)
—  51,442 
Total Affiliate Investments 326,145  295,366 
Control Investments
Secured first lien debt 504  2,905 
Secured second lien debt —  — 
Preferred equity —  — 
Common equity/equivalents —  — 
Total Control Investments 504  2,905 
Total investments at fair value using Level 3 inputs $ 1,067,230  $ 920,486 
(A)Excludes our investment in Funko as of March 31, 2024 with a fair value of $18 thousand, which was valued using Level 2 inputs.
(B)Excludes our investment in Gladstone Alternative as of December 31, 2024 with a fair value of $5.0 million, which was valued using NAV as a practical expedient.
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, 2024 and March 31, 2024. The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements. The weighted-average calculations in the table below are based on the principal balances for all debt-related calculations and on the cost basis for all equity-related calculations for the particular input.
Quantitative Information about Level 3 Fair Value Measurements
Fair Value as of Valuation
Technique/
Methodology		 Unobservable
Input		 Range / Weighted-Average as of
December 31,
2024		 March 31,
2024		 December 31,
2024		 March 31,
2024
Secured first
lien debt		 $ 599,911  $ 474,856  TEV EBITDA multiple
2.8x – 11.8x /
6.8x
4.2x – 8.8x /
6.4x
EBITDA
$969 – $26,000 /
$12,328
$1,091 – $23,547 / $10,509
Revenue multiple
0.2x – 0.6x /
0.4x
0.3x – 0.6x /
0.4x
Revenue
$6,141 – $100,934 /
$70,883
$31,586 – $93,916 / $77,580
Secured second
lien debt		 96,229  113,703  TEV EBITDA multiple
5.7x – 7.0x /
 6.6x
5.1x – 15.0x /
7.0x
EBITDA
$4,489 – $23,258 /
$14,721
$5,648 – $23,003 / $14,192
12,514  25,000  Yield Analysis Discount Rate
19.7% – 19.7% / 19.7%
13.8% – 13.8% / 13.8%
Preferred
equity		 308,226  213,480  TEV EBITDA multiple
2.8x – 11.8x /
6.0x
4.2x – 8.8x /
6.1x
EBITDA
$1,292 – $26,000 /
$11,696
$1,091 – $23,547 / $9,502
Revenue multiple
0.2x – 0.6x /
0.3x
0.3x – 0.6x /
0.4x
Revenue
$6,141 – $100,934 /
$52,338
$31,586 – $93,916 / $75,099
Common equity/
equivalents(A)(B)
50,350  93,447  TEV EBITDA multiple
5.5x – 8.1x /
6.6x
5.0x – 15.0x /
6.4x
EBITDA
$969 – $23,258 /
$17,987
$1,154 – $63,269 / $23,615
Total $ 1,067,230  $ 920,486 
(A)Fair value as of December 31, 2024 excludes our investment in Gladstone Alternative with a fair value of $5.0 million, which was valued using NAV as a practical expedient.
(B)Fair value as of March 31, 2024 excludes our investment in Funko with a fair value of $18 thousand, 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 market yields, 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 months ended December 31, 2024 and 2023 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
Three Months ended December 31, 2024:
Fair value as of September 30, 2024
 $ 469,480  $ 111,344  $ 228,528  $ 43,955  $ 853,307 
Total gain (loss):
Net realized gain (loss)(A)
—  —  —  —  — 
Net unrealized appreciation (depreciation)(B)
454  (2,601) 33,081  6,395  37,329 
Reversal of previously recorded (appreciation) depreciation upon realization(B)
—  —  —  —  — 
New investments, repayments and settlements(C):
Issuances / originations
 135,477  —  46,617  —  182,094 
Settlements / repayments
 (5,500) —  —  —  (5,500)
Sales
 —  —  —  —  — 
Transfers
 —  —  —  —  — 
Fair value as of December 31, 2024
 $ 599,911  $ 108,743  $ 308,226  $ 50,350  $ 1,067,230 

Secured
First Lien
Debt		 Secured
Second Lien
Debt
Preferred
Equity
 Common
Equity/
Equivalents		 Total
Nine Months Ended December 31, 2024
Fair value as of March 31, 2024 $ 474,856  $ 138,703  $ 213,480  $ 93,447  $ 920,486 
Total gain (loss):
Net realized gain (loss)(A)
—  —  —  42,284  42,284 
Net unrealized appreciation (depreciation)(B)
(22,020) (4,960) 48,129  1,150  22,299 
Reversal of previously recorded (appreciation) depreciation upon realization(B)
—  —  —  (38,028) (38,028)
New investments, repayments and settlements(C):
Issuances / originations
 155,575  —  46,617  —  202,192 
Settlements / repayments
 (8,500) (25,000) —  —  (33,500)
Sales
 —  —  —  (48,503) (48,503)
Transfers
 —  —  —  —  — 
Fair value as of December 31, 2024
 $ 599,911  $ 108,743  $ 308,226  $ 50,350  $ 1,067,230 
Secured
First Lien
Debt
Secured
Second Lien
Debt
Preferred
Equity
Common
Equity/
Equivalents
 Total
Three Months ended December 31, 2023:
Fair value as of September 30, 2023
 $ 508,504  $ 102,747  $ 267,596  $ 36,767  $ 915,614 
Total gain (loss):
Net realized gain (loss)(A)
—  —  43,459  —  43,459 
Net unrealized appreciation (depreciation)(B)
(7,040) (4,267) 4,911  3,428  (2,968)
Reversal of previously recorded (appreciation) depreciation upon realization(B)
(1,338) —  (42,228) —  (43,566)
New investments, repayments and settlements(C):
Issuances / originations
 3,500  39,000  —  25,700  68,200 
Settlements / repayments
 (27,500) —  —  —  (27,500)
Sales
 —  —  (50,453) —  (50,453)
Transfers(E)
—  —  (8,621) 8,621  — 
Fair value as of December 31, 2023
 $ 476,126  $ 137,480  $ 214,664  $ 74,516  $ 902,786 
Secured
First Lien
Debt
Secured
Second Lien
Debt
Preferred
Equity
Common
Equity/
Equivalents
 Total
Nine Months Ended December 31, 2023:
Fair value as of March 31, 2023
 $ 437,517  $ 75,734  $ 222,585  $ 17,680  $ 753,516 
Total gain (loss):
Net realized gain (loss)(A)
—  —  43,732  882  44,614 
Net unrealized appreciation (depreciation)(B)
(6,153) (2,254) 35,234  18,228  45,055 
Reversal of previously recorded (appreciation) depreciation upon realization(B)
(1,338) —  (42,228) (93) (43,659)
New investments, repayments and settlements(C):
Issuances / originations
 73,600  64,000  14,688  30,700  182,988 
Settlements / repayments
 (27,500) —  —  —  (27,500)
Sales(D)
—  —  (50,726) (1,502) (52,228)
Transfers(E)
—  —  (8,621) 8,621  — 
Fair value as of December 31, 2023
 $ 476,126  $ 137,480  $ 214,664  $ 74,516  $ 902,786 
Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective three and nine months ended December 31, 2024 and 2023.
(B)Included in net unrealized appreciation (depreciation) of investments on our accompanying Consolidated Statements of Operations for the respective three and nine months ended December 31, 2024 and 2023.
(C)Includes increases in the cost basis of investments resulting from new portfolio investments, the amortization of discounts 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)The nine months ended December 31, 2023 includes $0.3 million of proceeds from the recapitalization of Old World Christmas, Inc. ("Old World").
(E)For the three and nine months ended December 31, 2023, transfers represent preferred equity of SFEG Holdings, Inc. ("SFEG") with a total cost basis and fair value of $4.8 million and $8.6 million, respectively, which was converted to common equity in October 2023.
Investment Activity
During the nine months ended December 31, 2024, the following significant transactions occurred:
•In May 2024, our remaining shares in Funko were sold representing an exit of our investment in Funko, and resulting in a return of our equity cost basis of $21 thousand and a realized gain of $2 thousand.
•In July 2024, we invested an additional $18.5 million through secured first lien debt in Nocturne Luxury Villas, Inc. ("Nocturne") to fund an add-on acquisition.

•In September 2024, we exited our investment in Nth Degree Investment Group, LLC, which resulted in success fee income of $0.1 million, a realized gain on our preferred equity of $42.3 million and the repayment of our debt investment of $25.0 million.

•In November 2024, we invested $27.2 million in a new portfolio company, Pyrotek Special Effects, Inc. ("Pyrotek"), in the form of $20.1 million of secured first lien debt and $7.1 million of preferred equity. Pyrotek, headquartered in Ontario, Canada, is a leading provider of special effects services and solutions for the live entertainment industry.

•In December 2024, we invested $5.0 million in Gladstone Alternative, one of our affiliated funds, through common equity. Gladstone Alternative is a registered, non-diversified, closed-end management investment company that operates as an interval fund.

•In December 2024, we invested $71.3 million in a new portfolio company, Nielsen-Kellerman, Inc. ("Nielsen-Kellerman"), in the form of $49.1 million of secured first lien debt and $22.2 million of preferred equity. Nielsen-Kellerman, headquartered in Boothwyn, Pennsylvania, designs, manufactures, and distributes a wide range of rugged, waterproof environmental measurement and sports performance instruments.

•In December 2024, we invested $78.7 million in a new portfolio company, Ricardo Defense, Inc. ("Ricardo"), in the form of $61.3 million of secured first lien debt and $17.4 million of preferred equity. Ricardo, headquartered in Troy, Michigan, with operations in California, Texas and Alabama and overseas, develops engineering and product solutions for U.S. Army vehicle and logistics programs.
Investment Concentrations
As of December 31, 2024, our investment portfolio consisted of investments in 26 portfolio companies located in 20 states or countries across 17 different industries with an aggregate fair value of $1.1 billion. Our investments in Nocturne, SFEG, Ricardo, Old World and Brunswick Bowling Products, Inc. represented our five largest portfolio investments at fair value and collectively comprised $443.5 million, or 41.4%, of our total investment portfolio at fair value as of December 31, 2024.
The following table summarizes our investments by security type as of December 31, 2024 and March 31, 2024:
December 31, 2024 March 31, 2024
Cost Fair Value Cost Fair Value
Secured first lien debt $ 660,499  64.6  % $ 599,911  55.9  % $ 513,425  60.1  % $ 474,856  51.6  %
Secured second lien debt 119,958  11.7  % 108,743  10.1  % 144,958  16.9  % 138,703  15.0  %
Total debt 780,457  76.3  % 708,654  66.0  % 658,383  77.0  % 613,559  66.6  %
Preferred equity 191,687  18.8  % 308,226  28.8  % 145,070  17.0  % 213,480  23.2  %
Common equity/equivalents 49,597  4.9  % 55,350  5.2  % 50,837  6.0  % 93,465  10.2  %
Total equity/equivalents 241,284  23.7  % 363,576  34.0  % 195,907  23.0  % 306,945  33.4  %
Total investments
 $ 1,021,741  100.0  % $ 1,072,230  100.0  % $ 854,290  100.0  % $ 920,504  100.0  %
Investments at fair value consisted of the following industry classifications as of December 31, 2024 and March 31, 2024:
December 31, 2024 March 31, 2024
Fair Value Percentage of
Total Investments		 Fair Value Percentage of Total Investments
Diversified/Conglomerate Services $ 167,188  15.6  % $ 264,535  28.7  %
Home and Office Furnishings, Housewares, and Durable Consumer Products 164,017  15.3  % 160,038  17.3  %
Hotels, Motels, Inns, and Gaming 116,534  10.9  % 77,366  8.4  %
Aerospace and Defense 108,464  10.1  % 29,064  3.2  %
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) 100,919  9.4  % 92,781  10.1  %
Leisure, Amusement, Motion Pictures, and Entertainment 74,334  6.9  % 39,350  4.3  %
Electronics 71,321  6.7  % —  —  %
Oil and Gas 67,775  6.3  % 51,171  5.6  %
Buildings and Real Estate 61,703  5.8  % 60,431  6.6  %
Healthcare, Education, and Childcare 44,131  4.1  % 49,638  5.4  %
Mining, Steel, Iron and Non-Precious Metals 35,586  3.3  % 30,537  3.3  %
Chemicals, Plastics, and Rubber 15,889  1.5  % 20,363  2.2  %
Printing and Publishing 14,400  1.3  % 14,238  1.5  %
Cargo Transport 12,514  1.2  % 13,500  1.5  %
Telecommunications 6,796  0.6  % 9,002  1.0  %
Other < 2.0% 10,659  1.0  % 8,490  0.9  %
Total investments $ 1,072,230  100.0  % $ 920,504  100.0  %
Investments at fair value were included in the following geographic regions of the U.S. and Canada as of December 31, 2024 and March 31, 2024:
December 31, 2024 March 31, 2024
Location Fair Value Percentage of
Total Investments		 Fair Value Percentage of
Total Investments
United States
Northeast
 $ 305,374  28.5  % $ 207,870  22.6  %
South
 295,954  27.6  % 346,838  37.7  %
Midwest
 222,587  20.8  % 141,925  15.4  %
West
 221,135  20.6  % 223,871  24.3  %
Canada 27,180  2.5  % —  —  %
Total investments $ 1,072,230  100.0  % $ 920,504  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, 2024:

Amount
For the remaining three months ending March 31, 2025
 $ 49,060 
For the fiscal years ending March 31:
2026 215,780 
2027 219,486 
2028 66,231 
2029 100,394 
Thereafter 129,506 
Total contractual repayments $ 780,457 
Investments in equity securities 241,284 
Total cost basis of investments held as of December 31, 2024:
 $ 1,021,741 
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, 2024 and March 31, 2024, we had gross receivables from portfolio companies of $2.4 million and $2.2 million, respectively. As of December 31, 2024 and March 31, 2024, the allowance for uncollectible receivables was $1.6 million and $1.4 million, respectively.