GLADSTONE CAPITAL CORP

General

We were incorporated under the Maryland General Corporation Law on May 30, 2001. We operate as an externally managed, closed-end, non-diversified management investment company, and have elected to be treated as a BDC under the 1940 Act. In addition, for federal income tax purposes we have elected to be treated as a RIC under the Code. To continue to qualify as a RIC for federal income tax purposes and obtain favorable RIC tax treatment, we must meet certain requirements, including certain minimum distribution requirements.

We were established for the purpose of investing in debt and equity securities of established private businesses operating in the U.S. Our investment objectives are to: (1) achieve and grow current income by investing in debt securities of established lower middle market companies in the U.S. that we believe will provide stable earnings and cash flow to pay expenses, make principal and interest payments on our outstanding indebtedness and make distributions to stockholders that grow over time; and (2) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities, in connection with our debt investments, that we believe can grow over time to permit us to sell our equity investments for capital gains. To achieve our investment objectives, our primary investment strategy is to invest in several categories of debt and equity securities, with each investment generally ranging from $8 million to $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 90.0% debt investments and 10.0% equity investments, at cost. As of June 30, 2025, our investment portfolio was made up of approximately 90.0% debt investments and 10.0% equity investments, at cost.

We focus on investing in lower middle market companies (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization of $3 million to $25 million) in the U.S. that meet certain criteria, including the following: the sustainability of the business’ free cash flow and its ability to grow it over time, adequate assets for loan collateral, experienced management teams with a significant ownership interest in the borrower, reasonable capitalization of the borrower, including an ample equity contribution or cushion based on prevailing enterprise valuation multiples and, to a lesser extent, the potential to realize appreciation and gain liquidity in our equity position, if any. We lend to borrowers that need funds for growth capital or to finance acquisitions or recapitalize or refinance their existing debt facilities. We seek to avoid investing in high-risk, early-stage enterprises. Our targeted portfolio companies are generally considered too small for the larger capital marketplace.

We invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the opportunity. 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 Investment Corporation, Gladstone Alternative Income Fund (“Gladstone Alternative”), and any future BDC or registered 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 co-investments with Gladstone Investment Corporation and Gladstone Alternative pursuant to the Co-Investment Order. We believe the Co-Investment Order hasenhanced 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, our investment is likely to be smaller than if we were investing alone.

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

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

Business

Portfolio and Investment Activity

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

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

During the nine months ended June 30, 2025, we invested $204.0 million in ten new portfolio companies and extended $66.1 million in investments to existing portfolio companies. In addition, we exited eight portfolio companies during the nine months ended June 30, 2025. We received a total of $328.8 million in combined net proceeds and principal repayments from the aforementioned portfolio company exits, as well as principal repayments by existing portfolio companies, during the nine months ended June 30, 2025. Our overall portfolio consists of 51 portfolio companies as of June 30, 2025 and increased by $6.8 million at cost since September 30, 2024. From our initial public offering in August 2001 through June 30, 2025, we have made 695 different loans to, or investments in, 287 companies for a total of approximately $3.0 billion, before giving effect to principal repayments on investments and divestitures.

During the nine months ended June 30, 2025, the following significant transactions occurred:

Proprietary Investments

•In October 2024, our $15.0 million debt investment in Perimeter Solutions Group paid off at par. We also received a $0.5 million prepayment penalty in conjunction with the payoff.

•In October 2024, our investment in Antenna Research Associates, Inc. was sold, which resulted in a net realized gain on our common equity of approximately $59.3 million and the repayment of our debt investment of $31.3 million at par.

•In November 2024, we invested an additional $28.9 million in Giving Home Healthcare, LLC (“Giving Home”), an existing portfolio company, through secured first lien debt. In June 2025, we invested an additional $7.0 million in Giving Home through secured first lien debt.

•In November 2024, we invested $10.5 million in Wings ‘N More Restaurants, LLC (“Wings”) through secured first lien debt. We also extended Wings a $1.5 million secured first lien line of credit commitment and a $5.0 million secured first lien delayed draw term loan commitment, both of which were unfunded at close.

•In November 2024, our $22.3 million debt investment in ENET Holdings, LLC paid off at par.

•In December 2024, we invested $42.8 million in Vet’s Choice Radiology, LLC through secured first lien debt.

•In December 2024, we invested $28.9 million in Pan-Am Dental, LLC through secured second lien debt and preferred equity.

•In December 2024, we invested $15.0 million in Freedom Dental Management, Inc. through secured first lien debt.

•In December 2024, we invested $5.0 million in Tube Bending Technology, LLC through secured second lien debt.

•In December 2024, we invested $5.0 million in Gladstone Alternative, one of our affiliated funds, through common equity.

•In December 2024, our investment in Salt and Straw, LLC, paid off which resulted in a realized gain of approximately $2.5 million on our preferred equity and the repayment of our debt investment of $10.9 million at par. We also received a $0.1 million prepayment penalty in conjunction with the payoff. We continue to hold warrants for common equity in Salt and Straw, LLC.

•In December 2024, we sold our debt investments in DKI Ventures, LLC, which resulted in a net realized loss on our debt of approximately $4.1 million.

•In January 2025, our $20.6 million debt investment in Fix-It Group, LLC paid off at par. We also received a $0.1 million prepayment penalty.

•In January 2025, our $5.4 million debt investment in Sokol and Company, LLC (“Sokol”) paid off at par. Additionally, in February 2025, a portion of our common equity investment in Sokol was sold, representing a return of our equity cost basis of $1.1 million and a realized gain of $4.7 million.

•In February 2025, we invested $18.9 million in Dutch Gold Honey, Inc. through secured second lien debt and common equity.

•In February 2025, we invested $19.4 million in Viron International, LLC through secured first lien debt and common equity.

•In March 2025, we received a $6.0 million partial repayment on our debt investment in Viva Railings, LLC.

•In March 2025, we exited our investment in MCG Energy Solutions, LLC, which resulted in a realized gain on our preferred equity investment of approximately $3.0 million and the repayment of our debt investment of $20.4 million at par.

•In April 2025, our $42.2 million debt investment in SpaceCo Holdings, LLC paid off at par.

•In April 2025, our investment in Eegees, LLC was restructured as part of the bankruptcy process resulting in a new $12.8 million first lien debt investment and a new $8.5 million common equity investment in Eegee Acquisition Corporation. In conjunction with the restructuring, we recorded a net realized loss of approximately $4.4 million.

•In May 2025, we invested $46.0 million in Altior Healthcare, LLC through secured first lien debt.

•In June 2025, our $36.1 million debt investment in Cafe Zupas paid off at par. We also received a $0.4 million prepayment penalty in conjunction with the payoff.

•In June 2025, we invested $12.6 million in RF Technologies, LLC through secured first lien debt. We also extended RF Technologies, LLC a $3.5 million secured first lien line of credit commitment which was unfunded as of June 30, 2025.

Capital Raising

We have been able to meet our capital needs through extensions of and amendments to our line of credit with KeyBank National Association (“KeyBank”), as administrative agent, lead arranger and lender (as amended and/or restated from time to time, our “Credit Facility”) and by accessing the capital markets in the form of public equity offerings of common and preferred stock and public and private debt offerings. We have successfully extended the Credit Facility’s revolving period multiple times, most recently to October 2027, and currently have a total commitment amount of $320.0 million. In August 2023, we completed an offering of $57.0 million aggregate principal amount of the 2028 Notes. Refer to“Liquidity and Capital Resources — Revolving Line of Credit,” “Liquidity and Capital Resources — Equity — Common Stock,” and“Liquidity and Capital Resources — Notes Payable” for further discussion.

Although we have been able to access the capital markets historically and in recent years, market conditions may affect the trading price of our capital stock and thus may inhibit our ability to finance new investments through the issuance of equity in the future. When our common stock trades below net asset value (“NAV”) per common share, our ability to issue equity is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock below NAV per common share without first obtaining approval from our stockholders and our independent directors, other than through sales to our then-existing stockholders pursuant to a rights offering.

On June 30, 2025, the closing market price of our common stock was $26.97 per share, a 26.9% premium to our June 30, 2025 NAV per share of $21.25.

Regulatory Compliance

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

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

As of June 30, 2025, our asset coverage on our “senior securities representing indebtedness” was 267.9% and our asset coverage on our “senior securities that are stock” was 253.7%.

Recent Developments

Distributions

On July 10, 2025, our Board of Directors declared the following distributions to common and preferred stockholders: