GLADSTONE CAPITAL CORP

RESULTS OF OPERATIONS

Comparison of the Three Months Ended June 30, 2025 to the Three Months Ended June 30, 2024

NM - Not Meaningful

Investment Income

Interest income decreased by 10.1% for the three months ended June 30, 2025, as compared to the prior year period. 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 for the three months ended June 30, 2025 was $647.2 million, compared to $664.6 million for the three months ended June 30, 2024, a decrease of $17.4 million, or 2.6%. The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which decreased to 12.8% for the three months ended June 30, 2025, compared to 13.9% for the three months ended June 30, 2024, inclusive of any allowances on interest receivables made during those periods. The decrease in the weighted average yield was driven mainly by decreases in interest rates.

As of June 30, 2025, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $28.8 million, or 4.1% of the cost basis of all debt investments in our portfolio, and a fair value of $11.5 million, or 1.7% of the fair value of all debt investments in our portfolio. As of September 30, 2024, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $28.3 million, or 4.1% of the cost basis of all debt investments in our portfolio, and a fair value of $12.8 million, or 1.9% of the fair value of all debt investments in our portfolio.

Success fee, dividend and other income decreased by 67.7% during the three months ended June 30, 2025, as compared to the prior year period, primarily due to decreases in dividend income and prepayment fees received period over period.

As of June 30, 2025, no single investment represented greater than 10% of the total investment portfolio at fair value. As of September 30, 2024, our investment in Antenna Research Associates, Inc. represented 11.4% of the total investment portfolio at fair value.

Expenses

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, decreased $2.9 million, or 22.1%, for the three months ended June 30, 2025, as compared to the prior year period. This decrease was primarily due to a $1.2 million decrease in the net incentive fee earned by the Adviser, a $1.1 million decrease in interest expense, and a $0.6 million decrease in the net base management fee earned by the Adviser.

Total interest expense on borrowings and notes payable decreased by $1.1 million, or 19.2%, during the three months ended June 30, 2025, driven by a decrease in the weighted average balance outstanding on our Credit Facility, partially offset by an increase in the effective interest rate on our Credit Facility. Interest expense on our Credit Facility decreased by $1.1 million due primarily to a decrease in the weighted average balance outstanding which was $6.6 million during the three months ended June 30, 2025, as compared to $76.8 million in the prior year period, a decrease of 91.4%. The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding the impact of deferred financing costs, was 58.3% during the three months ended June 30, 2025, compared to 10.5% during the prior year period. The increase in the effective interest rate was driven primarily by a $0.3 million increase in unused commitment fees on the undrawn portion of the Credit Facility, partially offset by a decrease in interest rates on the drawn portion of the Credit Facility during the three months ended June 30, 2025.

The net base management fee earned by the Adviser decreased by $0.6 million, or 21.4%, for the three months ended June 30, 2025, as compared to the prior year period, resulting from an increase in credits to the base management fee from the Adviser for new deal origination fees period over period.

The income-based incentive fee decreased by $0.5 million, or 15.7%, for the three months ended June 30, 2025, primarily due to lower pre-incentive fee net investment income as compared to the prior year period. During the three months ended June 30, 2025, our Board of Directors accepted non-contractual, unconditional and irrevocable credits from the Adviser of $0.7 million to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of distributions to common stockholders. There were no such credits during the three months ended June 30, 2024.

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

(A)Average total assets subject to the base management fee is defined as total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the applicable quarters within the respective periods and adjusted appropriately for any share issuances or repurchases during the periods.

(B)Excludes our investment in Gladstone Alternative valued at the end of the applicable quarters within the respective periods.

(C)Reflected, on a gross basis, as a line item on our Consolidated Statements of Operations.

Net Realized Gain (Loss) on Investments

For the three months ended June 30, 2025, we recorded a net realized loss on investments of $3.7 million, which resulted primarily from a $4.4 million realized loss recognized on the restructure of our investment in Eegee’s LLC, partially offset by a $0.7 million realized gain recognized on our investment in Giving Home Health Care, LLC.

For the three months ended June 30, 2024, we recorded a net realized gain on investments of $1.4 million, which resulted primarily from a $1.5 million realized gain recognized on our investment in Giving Home Health Care, LLC.

Net Unrealized Appreciation (Depreciation) of Investments

During the three months ended June 30, 2025, we recorded net unrealized depreciation of investments in the aggregate amount of $34 thousand. The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the three months ended June 30, 2025 were as follows:

The primary driver of net unrealized depreciation of $34 thousand for the three months ended June 30, 2025 was the decline in the financial and operational performance of Lonestar EMS, LLC and Eegee Acquisition Corp., partially offset by the reversal of unrealized depreciation recognized on our investment in Eegee’s LLC.

During the three months ended June 30, 2024, we recorded net unrealized appreciation of investments in the aggregate amount of $3.4 million. The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the three months ended June 30, 2024 were as follows:

The primary driver of net unrealized appreciation of $3.4 million for the three months ended June 30, 2024 was the improvement in the financial and operational performance of Antenna Research Associates, Inc, partially offset by the decline in the financial and operational performance of Engineering Manufacturing Technologies, LLC.

Comparison of the Nine Months Ended June 30, 2025 to the Nine Months Ended June 30, 2024

NM - Not Meaningful

Investment Income

Interest income decreased by 9.2% for the nine months ended June 30, 2025, as compared to the prior year period. 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 for the nine months ended June 30, 2025 was $657.3 million, compared to $667.5 million for the nine months ended June 30, 2024, a decrease of $10.2 million, or 1.5%. The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which decreased to 12.8% for the nine months ended June 30, 2025, compared to 13.9% for the nine months ended June 30, 2024, inclusive of any allowances on interest receivables made during those periods. The decrease in the weighted average yield was driven mainly by decreases in interest rates.

As of June 30, 2025, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $28.8 million, or 4.1% of the cost basis of all debt investments in our portfolio, and a fair value of $11.5 million, or 1.7% of the fair value of all debt investments in our portfolio. As of September 30, 2024, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $28.3 million, or 4.1% of the cost basis of all debt investments in our portfolio, and a fair value of $12.8 million, or 1.9% of the fair value of all debt investments in our portfolio.

Other income decreased by 44.1% during the nine months ended June 30, 2025, as compared to the prior year period, primarily due to a decrease in dividend income period over period.

As of June 30, 2025, no single investment represented greater than 10% of the total investment portfolio at fair value. As of September 30, 2024, our investment in Antenna Research Associates, Inc. represented 11.4% of the total investment portfolio at fair value.

Expenses

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, decreased $6.4 million, or 16.9%, for the nine months ended June 30, 2025, as compared to the prior year period. This decrease was primarily due to a $3.3 million decrease in the net incentive fee earned by the Adviser, a $2.1 million decrease in interest expense, and a $1.2 million decrease in the net base management fee earned by the Adviser.

Total interest expense on borrowings and notes payable decreased by $2.1 million, or 12.7%, during the nine months ended June 30, 2025, driven by a decrease in the weighted average balance outstanding on our Credit Facility, partially offset by an increase in the effective interest rate on our Credit Facility. Interest expense on our Credit Facility decreased by $2.1 million due primarily to a decrease in the weighted average balance outstanding which was $28.7 million during the nine months ended June 30, 2025, as compared to $71.8 million in the prior year period, a decrease of 60.0%. The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding the impact of deferred financing costs, was 17.3% during the nine months ended June 30, 2025, compared to 10.7% during the prior year period. The increase in the effective interest rate was driven primarily by a $0.9 million increase in unused commitment fees on the undrawn portion of the Credit Facility, partially offset by a decrease in interest rates on the drawn portion of the Credit Facility during the nine months ended June 30, 2025 as compared to the prior year period.

The net base management fee earned by the Adviser decreased by $1.2 million, or 15.8%, for the nine months ended June 30, 2025, as compared to the prior year period, resulting from an increase in credits to the base management fee from the Adviser for new deal origination fees period over period, partially offset by an increase in average total assets subject to the base management fee.

The income-based incentive fee decreased by $1.0 million, or 11.7%, for the nine months ended June 30, 2025, primarily due to lower pre-incentive fee net investment income as compared to the prior year period. During the nine months ended June 30, 2025 and 2024, our Board of Directors accepted non-contractual, unconditional and irrevocable credits from the Adviser of $2.3 million and $0.1 million, respectively, to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of distributions to common stockholders.

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

(A)Average total assets subject to the base management fee is defined as total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the applicable quarters within the respective periods and adjusted appropriately for any share issuances or repurchases during the periods.

(B)Excludes our investment in Gladstone Alternative valued at the end of the applicable quarters within the respective periods.

(C)Reflected, on a gross basis, as a line item on our Consolidated Statements of Operations.

Net Realized Gain (Loss) on Investments

For the nine months ended June 30, 2025, we recorded a net realized gain on investments of $61.7 million, which resulted from a $59.3 million realized gain recognized on the sale of our investment in Antenna Research Associates, Inc., a $4.7 million realized gain recognized on the partial sale of our common equity investment in Sokol, a $3.0 million realized gain recognized on our investment in MCG Energy Solutions, LLC, and a $2.5 million realized gain recognized on our investment in Salt & Straw, LLC, partially offset by a $4.4 million realized loss recognized on the restructure of our investment in Eegee’s LLC and a $4.1 million realized loss recognized on the sale of our investment in DKI Ventures, LLC.

For the nine months ended June 30, 2024, we recorded a net realized gain on investments of $1.9 million, which resulted primarily from a $1.5 million realized gain recognized on our investment in Giving Home Health Care, LLC, a $0.3 million realized gain recognized on the sale of our investment in PIC 360, LLC, and a $0.2 million realized gain recognized on our investment in Trowbridge Chicago, LLC.

Net Unrealized Appreciation (Depreciation) of Investments

During the nine months ended June 30, 2025, we recorded net unrealized depreciation of investments in the aggregate amount of $51.8 million. The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the nine months ended June 30, 2025 were as follows:

The primary driver of net unrealized depreciation of $51.8 million for the nine months ended June 30, 2025 was the

reversal of unrealized appreciation from the exit of our investment in Antenna Research Associates, Inc., partially offset by the increase in the financial and operational performance of certain of our other portfolio companies.

During the nine months ended June 30, 2024, we recorded net unrealized appreciation of investments in the aggregate amount of $21.9 million. The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the nine months ended June 30, 2024 were as follows:

The primary driver of net unrealized appreciation of $21.9 million for the nine months ended June 30, 2024 was the improvement in the financial and operational performance of Antenna Research Associates, Inc. and Lonestar EMS, LLC, partially offset by the decline in the financial and operational performance of FES Resources Holdings LLC and WB Xcel Holdings, LLC.