GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Six Months Ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
INVESTMENT INCOME | | | | | | | |
Interest income | | | | | | | |
Non-Control/Non-Affiliate investments | $ | 9,922 | | | $ | 7,407 | | | $ | 18,650 | | | $ | 14,284 | |
Affiliate investments | 4,286 | | | 6,678 | | | 8,296 | | | 15,509 | |
Control investments | — | | | 213 | | | — | | | 497 | |
Cash and cash equivalents | 29 | | | — | | | 32 | | | — | |
Total interest income | 14,237 | | | 14,298 | | | 26,978 | | | 30,290 | |
Dividend income | | | | | | | |
Non-Control/Non-Affiliate investments | 4,825 | | | 1 | | | 4,829 | | | 3 | |
Affiliate investments | — | | | 1,589 | | | 1,552 | | | 1,589 | |
Total dividend income | 4,825 | | | 1,590 | | | 6,381 | | | 1,592 | |
Success fee income | | | | | | | |
Non-Control/Non-Affiliate investments | 1,733 | | | 1,650 | | | 6,733 | | | 1,650 | |
Affiliate investments | — | | | 1,000 | | | — | | | 3,032 | |
Total success fee income | 1,733 | | | 2,650 | | | 6,733 | | | 4,682 | |
Total investment income | $ | 20,795 | | | $ | 18,538 | | | $ | 40,092 | | | 36,564 | |
| | | | | | | |
EXPENSES | | | | | | | |
Base management fee(A) | $ | 3,613 | | | $ | 3,577 | | | $ | 7,176 | | | 6,897 | |
Loan servicing fee(A) | 1,916 | | | 1,794 | | | 3,674 | | | 3,662 | |
Incentive fee(A) | 768 | | | 7,351 | | | 3,777 | | | 19,599 | |
Administration fee(A) | 562 | | | 571 | | | 942 | | | 970 | |
Interest expense on borrowings | 3,857 | | | 3,082 | | | 7,641 | | | 5,382 | |
Dividends on mandatorily redeemable preferred stock | — | | | 802 | | | — | | | 2,306 | |
Amortization of deferred financing costs and discounts | 450 | | | 452 | | | 898 | | | 908 | |
Professional fees | 938 | | | 343 | | | 1,233 | | | 649 | |
Other general and administrative expenses | 816 | | | 1,125 | | | 2,013 | | | 2,173 | |
Expenses before credits from Adviser | 12,920 | | | 19,097 | | | 27,354 | | | 42,546 | |
Credits to base management fee – loan servicing fee(A) | (1,916) | | | (1,794) | | | (3,674) | | | (3,662) | |
Credits to fees from Adviser - other(A) | (1,625) | | | (930) | | | (2,375) | | | (2,181) | |
Total expenses, net of credits to fees | 9,379 | | | 16,373 | | | 21,305 | | | 36,703 | |
NET INVESTMENT INCOME (LOSS) | $ | 11,416 | | | $ | 2,165 | | | $ | 18,787 | | | (139) | |
| | | | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | | | | |
Net realized gain (loss): | | | | | | | |
Non-Control/Non-Affiliate investments | $ | 2,302 | | | $ | — | | | $ | 7,031 | | | 143 | |
Affiliate investments | — | | | 464 | | | — | | | 2,250 | |
Control investments | — | | | — | | | (277) | | | — | |
Other | — | | | (1,998) | | | — | | | (1,998) | |
Total net realized gain | 2,302 | | | (1,534) | | | 6,754 | | | 395 | |
Net unrealized appreciation (depreciation): | | | | | | | |
Non-Control/Non-Affiliate investments | (985) | | | 15,101 | | | 14,004 | | | 32,003 | |
Affiliate investments | (9,658) | | | 16,926 | | | (24,435) | | | 46,134 | |
Control investments | — | | | (4,523) | | | — | | | (3,119) | |
Total net unrealized (depreciation) appreciation | (10,643) | | | 27,504 | | | (10,431) | | | 75,018 | |
Net realized and unrealized gain (loss) | (8,341) | | | 25,970 | | | (3,677) | | | 75,413 | |
| | | | | | | |
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 3,075 | | | $ | 28,135 | | | $ | 15,110 | | | $ | 75,274 | |
| | | | | | | |
BASIC AND DILUTED PER COMMON SHARE: | | | | | | | |
Net investment income | $ | 0.34 | | | $ | 0.07 | | | $ | 0.57 | | | $ | — | |
Net increase in net assets resulting from operations | $ | 0.09 | | | $ | 0.85 | | | $ | 0.45 | | | $ | 2.27 | |
| | | | | | | |
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING: | | | | | | | |
Basic and diluted | 33,218,901 | | | 33,205,023 | | | 33,212,000 | | | 33,205,023 | |
(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 CHANGES IN NET ASSETS
(IN THOUSANDS)
(UNAUDITED)
| | | | | | | | | | | |
| 2022 | | 2021 |
NET ASSETS, MARCH 31 | $ | 445,830 | | | $ | 382,364 | |
OPERATIONS | | | |
Net investment income (loss) | 7,371 | | | (2,304) | |
Net realized gain on investments | 4,452 | | | 1,929 | |
Net unrealized appreciation (depreciation) of investments | 212 | | | 47,514 | |
Net increase in net assets from operations | 12,035 | | | 47,139 | |
DISTRIBUTIONS(A) | | | |
Distributions to common stockholders from net investment income ($0.10 and $0.20 per share, respectively) | (3,188) | | | (6,593) | |
Distributions to common stockholders from net realized gains ($0.25 and $0.07 per share, respectively) | (8,268) | | | (2,372) | |
Net decrease in net assets from distributions | (11,456) | | | (8,965) | |
CAPITAL ACTIVITY | | | |
Issuance of common stock | — | | | — | |
Discounts, commissions, and offering costs for issuance of common stock | — | | | — | |
Net increase in net assets from capital activity | — | | | — | |
NET INCREASE (DECREASE) IN NET ASSETS | 579 | | | 38,174 | |
NET ASSETS, JUNE 30 | $ | 446,409 | | | $ | 420,538 | |
| | | |
OPERATIONS | | | |
Net investment income | $ | 11,416 | | | $ | 2,165 | |
Net realized gain on investments | 2,302 | | | 464 | |
Net realized loss on other | — | | | (1,998) | |
Net unrealized (depreciation) appreciation of investments | (10,643) | | | 27,504 | |
Net increase in net assets from operations | 3,075 | | | 28,135 | |
DISTRIBUTIONS(A) | | | |
Distributions to common stockholders from net investment income ($0.14 and $0.16 per share, respectively) | (4,678) | | | (5,490) | |
Distributions to common stockholders from net realized gains ($0.08 and $0.08 per share, respectively) | (2,797) | | | (2,482) | |
Net decrease in net assets from distributions | (7,475) | | | (7,972) | |
CAPITAL ACTIVITY | | | |
Issuance of common stock | 467 | | | — | |
Discounts, commissions, and offering costs for issuance of common stock | (6) | | | — | |
Net increase in net assets from capital activity | 461 | | | — | |
NET INCREASE (DECREASE) IN NET ASSETS | (3,939) | | | 20,163 | |
NET ASSETS, SEPTEMBER 30 | $ | 442,470 | | | $ | 440,701 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
(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)
| | | | | | | | | | | |
| Six Months Ended September 30, |
| 2022 | | 2021 |
CASH FLOWS FROM OPERATING ACTIVITIES | | | |
Net increase in net assets resulting from operations | $ | 15,110 | | | $ | 75,274 | |
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities: | | | |
Purchase of investments | (102,046) | | | (47,550) | |
Principal repayments of investments | 48,000 | | | 14,060 | |
Net proceeds from the sale and recapitalization of investments | 21,690 | | | 8,137 | |
Net realized gain on investments | (6,754) | | | (2,393) | |
Net realized loss on other | — | | | 1,998 | |
Net unrealized depreciation (appreciation) of investments | 10,431 | | | (75,018) | |
Amortization of premiums, discounts, and acquisition costs, net | (9) | | | (9) | |
Amortization of deferred financing costs and discounts | 898 | | | 908 | |
Bad debt expense, net of recoveries | 153 | | | 568 | |
Changes in assets and liabilities: | | | |
Decrease in interest receivable | 42 | | | 259 | |
Decrease (increase) in due from administrative agent | 4,164 | | | (656) | |
(Increase) decrease in other assets, net | (617) | | | 242 | |
Increase in accounts payable and accrued expenses | 999 | | | 913 | |
Increase in interest payable | 16 | | | 1,311 | |
(Decrease) increase in fees due to Adviser(A) | (1,578) | | | 15,698 | |
Decrease in fee due to Administrator(A) | (12) | | | (6) | |
Increase (decrease) in other liabilities | 68 | | | (22) | |
Net cash used in operating activities | (9,445) | | | (6,286) | |
| | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | |
Proceeds from issuance of common stock | 467 | | | — | |
Discounts, commissions, and offering costs for issuance of common stock | (6) | | | — | |
Proceeds from line of credit | 41,500 | | | 62,700 | |
Repayments on line of credit | (24,900) | | | (76,200) | |
Proceeds from issuance of notes payable | — | | | 134,550 | |
Redemption of mandatorily redeemable preferred stock | — | | | (94,371) | |
Deferred financing and offering costs | (277) | | | (3,432) | |
Distributions paid to common stockholders | (18,931) | | | (16,937) | |
Net cash (used in) provided by financing activities | (2,147) | | | 6,310 | |
| | | |
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS | (11,592) | | | 24 | |
| | | |
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD | 14,495 | | | 2,398 | |
| | | |
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD | $ | 2,903 | | | $ | 2,422 | |
| | | |
CASH PAID FOR INTEREST | $ | 6,739 | | | $ | 3,286 | |
(A)Refer to Note 4 — Related Party Transactions in the accompanying Notes to Consolidated Financial Statements for additional information.
Supplemental disclosures of non-cash operating activities:
•In August 2022, in conjunction with a refinancing at Ginsey Home Solutions, Inc. ("Ginsey"), there was a $5.1 million payment made by Ginsey to extinguish our secured borrowing liability. Refer to Note 3 - Investments and Note 5 - Borrowings for further discussion.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | |
Company and Investment(A)(B)(D)(E) | | Principal/Shares/ Units(F)(I) | | Cost | | Fair Value |
NON-CONTROL/NON-AFFILIATE INVESTMENTS(M) – 110.5% | | | | | | |
Secured First Lien Debt – 61.9% | | | | | | |
Buildings and Real Estate Total – 8.9%
| | | | | | |
Dema/Mai Holdings, Inc. – Line of Credit, $2,200 available (L+8.0%, 11.1% Cash, Due 7/2023)(K) | | $ | 800 | | | $ | 800 | | | $ | 800 | |
Dema/Mai Holdings, Inc. – Term Debt (L+11.0%, 14.1% Cash, Due 7/2027)(K) | | 38,250 | | | 38,250 | | | 38,250 | |
| | | | 39,050 | | | 39,050 | |
Diversified/Conglomerate Manufacturing – 1.2% | | | | | | |
Phoenix Door Systems, Inc – Line of Credit, $0 available (L+7.0%, 10.1% Cash (0.3% Unused Fee), Due 3/2024)(J) | | 2,550 | | | 2,550 | | | 2,410 | |
Phoenix Door Systems, Inc. – Term Debt (L+11.0%, 14.1% Cash, Due 9/2024)(J) | | 3,200 | | | 3,200 | | | 3,024 | |
| | | | 5,750 | | | 5,434 | |
Diversified/Conglomerate Services – 25.0% | | | | | | |
Counsel Press, Inc. – Term Debt (L+11.8%, 14.9% Cash, Due 3/2023)(K) | | 21,100 | | | 21,100 | | | 21,100 | |
Counsel Press, Inc. – Term Debt (L+13.0%, 16.1% Cash, Due 3/2023)(K) | | 6,400 | | | 6,400 | | | 6,400 | |
Horizon Facilities Services, Inc. – Term Debt (L+7.5%, 10.6% Cash, Due 6/2026)(K) | | 57,700 | | | 57,700 | | | 57,700 | |
Mason West, LLC – Term Debt (L+10.0%, 13.1% Cash, Due 7/2025)(K) | | 25,250 | | | 25,250 | | | 25,250 | |
| | | | 110,450 | | | 110,450 | |
Healthcare, Education, and Childcare – 4.5% | | | | | | |
Educators Resource, Inc. – Term Debt (L+10.5%, 13.6% Cash, Due 11/2023) (K) | | 20,000 | | | 20,000 | | | 20,000 | |
| | | | | | |
Home and Office Furnishings, Housewares, and Durable Consumer Products – 8.3% | | | | | | |
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 13.1% Cash, Due 1/2026) (K) | | 17,700 | | | 17,700 | | | 17,700 | |
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 13.1% Cash, Due 1/2026) (K) | | 6,850 | | | 6,850 | | | 6,850 | |
Ginsey Home Solutions, Inc. – Term Debt (L+10.0%, 13.5% Cash, Due 11/2025)(K) | | 12,200 | | | 12,200 | | | 12,200 | |
| | | | 36,750 | | | 36,750 | |
Hotels, Motels, Inns, and Gaming Total – 7.7% | | | | | | |
Nocturne Villa Rentals, Inc. – Line of Credit, $2,000 available (L+8.0%, 11.1% Cash, Due 6/2023)(K) | | — | | | — | | | — | |
Nocturne Villa Rentals, Inc. – Term Debt (L+10.5%, 13.6% Cash, Due 6/2026)(K) | | 34,050 | | | 34,050 | | | 34,050 | |
| | | | 34,050 | | | 34,050 | |
Leisure, Amusement, Motion Pictures, and Entertainment – 6.3% | | | | | | |
Schylling, Inc. – Term Debt (L+11.0%, 14.1% Cash, Due 5/2025)(K) | | 27,981 | | | 27,981 | | | 27,981 | |
| | | | | | |
Total Secured First Lien Debt | | | | $ | 274,031 | | | $ | 273,715 | |
| | | | | | |
Secured Second Lien Debt – 12.0% | | | | | | |
Aerospace and Defense – 5.4% | | | | | | |
Galaxy Technologies Holdings, Inc. – Term Debt (L+4.1%, 7.2% Cash, Due 10/2026)(K) | | $ | 6,500 | | | $ | 6,500 | | | $ | 6,102 | |
Galaxy Technologies Holdings, Inc. – Term Debt (L+7.0%, 10.1% Cash, Due 10/2026)(K) | | 18,796 | | | 18,796 | | | 17,644 | |
| | | | 25,296 | | | 23,746 | |
Automobile – 0.3% | | | | | | |
Country Club Enterprises, LLC – Term Debt (L+8.0%, 11.1% Cash, Due 7/2027)(J) | | 1,500 | | | 1,500 | | | 1,499 | |
Country Club Enterprises, LLC – Guaranty ($1,000) (Q) | | | | — | | | — | |
| | | | 1,500 | | | 1,499 | |
Cargo Transport – 2.9% | | | | | | |
Diligent Delivery Systems – Term Debt (L+9.0%, 12.1% Cash, Due 11/2022)(J) | | 13,000 | | | 12,996 | | | 13,000 | |
| | | | | | |
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 3.4% | | | | | | |
SFEG Holdings, Inc. – Term Debt (L+7.0%, 10.1% Cash, Due 11/2024)(K) | | 3,128 | | | 3,128 | | | 3,128 | |
SFEG Holdings, Inc. – Term Debt (L+7.0%, 10.1% Cash, Due 11/2024)(K) | | 11,736 | | | 11,736 | | | 11,736 | |
| | | | 14,864 | | | 14,864 | |
| | | | | | |
Total Secured Second Lien Debt | | | | $ | 54,656 | | | $ | 53,109 | |
| | | | | | |
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
SEPTEMBER 30, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | |
Company and Investment(A)(B)(D)(E) | | Principal/Shares/ Units(F)(I) | | Cost | | Fair Value |
Preferred Equity – 36.2% | | | | | | |
Buildings and Real Estate – 4.7% | | | | | | |
Dema/Mai Holdings, Inc. - Preferred Equity(C)(K) | | 21,000 | | | $ | 21,000 | | | $ | 21,000 | |
| | | | | | |
Diversified/Conglomerate Services – 12.3% | | | | | | |
Counsel Press, Inc. – Preferred Stock(C)(K) | | 6,995 | | | 6,995 | | | 27,246 | |
Horizon Facilities Services, Inc. – Preferred Stock(C)(K) | | 10,080 | | | — | | | 21,454 | |
Mason West, LLC – Preferred Stock(C)(K) | | 11,206 | | | 11,206 | | | 5,615 | |
| | | | 18,201 | | | 54,315 | |
Healthcare, Education, and Childcare – 4.3% | | | | | | |
Educators Resource, Inc. – Preferred Stock(C)(K) | | 8,560 | | | 8,560 | | | 18,937 | |
| | | | | | |
Home and Office Furnishings, Housewares, and Durable Consumer Products – 6.3% | | | | | | |
Brunswick Bowling Products, Inc. – Preferred Stock(C)(K) | | 6,653 | | | 6,653 | | | 27,980 | |
Ginsey Home Solutions, Inc. – Preferred Stock(C)(K) | | 19,280 | | | 9,583 | | | — | |
| | | | 16,236 | | | 27,980 | |
Hotels, Motels, Inns, and Gaming – 4.3% | | | | | | |
Nocturne Villa Rentals, Inc. – Preferred Stock (C)(K) | | 6,600 | | | 6,600 | | | 19,040 | |
| | | | | | |
Leisure, Amusement, Motion Pictures, and Entertainment – 3.7% | | | | | | |
Schylling, Inc. – Preferred Stock(C)(K) | | 4,000 | | | 4,000 | | | 16,475 | |
| | | | | | |
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.6% | | | | | | |
SFEG Holdings, Inc. – Preferred Stock(C)(K) | | 29,577 | | | 4,643 | | | 2,543 | |
| | | | | | |
Total Preferred Equity | | | | $ | 79,240 | | | $ | 160,290 | |
| | | | | | |
Common Equity/Equivalents – 0.4% | | | | | | |
Aerospace and Defense – 0.0% | | | | | | |
Galaxy Technologies Holdings, Inc. – Common Stock(C)(K) | | 16,957 | | | $ | 11,513 | | | $ | — | |
| | | | | | |
Cargo Transport – 0.4% | | | | | | |
Diligent Delivery Systems – Common Stock Warrants(C)(K) | | 8 | % |
| 500 | | | 1,827 | |
| | | | | | |
Diversified/Conglomerate Manufacturing– 0.0% | | | | | | |
Phoenix Door Systems, Inc. – Common Stock(C)(K) | | 3,195 | | | 1,452 | | | — | |
| | | | | | |
Home and Office Furnishings, Housewares, and Durable Consumer Products – 0.0% | | | | | | |
Ginsey Home Solutions, Inc. – Common Stock(C)(K) | | 63,747 | | | 8 | | | — | |
| | | | | | |
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic)- 0.0% | | | | | | |
SFEG Holdings, Inc. – Common Stock(C)(K) | | 221,500 | | | 222 | | | — | |
| | | | | | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% | | | | | | |
Funko Acquisition Holdings, LLC(L) – Common Units(C)(P) | | 4,239 | | | 21 | | | 58 | |
| | | | | | |
Total Common Equity/Equivalents | | | | $ | 13,716 | | | $ | 1,885 | |
| | | | | | |
Total Non-Control/Non-Affiliate Investments | | | | $ | 421,643 | | | $ | 488,999 | |
| | | | | | |
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
SEPTEMBER 30, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | |
Company and Investment(A)(B)(D)(E) | | Principal/Shares/ Units(F)(I) | | Cost | | Fair Value |
AFFILIATE INVESTMENTS(N) – 56.1% | | | | | | |
Secured First Lien Debt – 33.3% | | | | | | |
Diversified/Conglomerate Manufacturing – 0.9% | | | | | | |
Edge Adhesives Holdings, Inc.(L) – Term Debt (L+5.5%, 8.6% Cash, Due 8/2024)(K) | | 9,210 | | | $ | 9,210 | | | $ | 3,825 | |
| | | | | | |
Diversified/Conglomerate Services – 18.3% | | | | | | |
ImageWorks Display and Marketing Group, Inc. – Term Debt (L+11.0%, 14.1% Cash, Due 11/2022)(K) | | 22,000 | | | 22,000 | | | 22,000 | |
J.R. Hobbs Co. - Atlanta, LLC – Line of Credit, $4,000 available (L+6.0%, 9.1% Cash, Due 6/2025)(G)(K) | | 1,000 | | | 1,000 | | | 660 | |
J.R. Hobbs Co. - Atlanta, LLC - Term Debt (L+6.0%, 9.1% Cash, Due 6/2025) (G)(K) | | 16,500 | | | 16,500 | | | 10,900 | |
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+10.3%, 13.4% Cash, Due 6/2025) (G)(K) | | 26,000 | | | 26,000 | | | 17,176 | |
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+6.0%, 9.1% Cash, Due 6/2025) (G)(K) | | 2,438 | | | 2,438 | | | 1,610 | |
The Maids International, LLC – Term Debt (L+10.5%, 13.6% Cash, Due 3/2025)(K) | | 28,560 | | | 28,560 | | | 28,560 | |
| | | | 96,498 | | | 80,906 | |
Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.7% | | | | | | |
Old World Christmas, Inc. – Secured First Lien Term Loan (L+9.5%, 12.6% Cash, Due 12/2025)(K) | | 25,000 | | | 25,000 | | | 25,000 | |
| | | | | | |
Mining, Steel, Iron and Non-Precious Metals Total – 4.1% | | | | | | |
Utah Pacific Bridge & Steel, Ltd. (L+10.0%, 13.1% Cash, Due 7/2026)(K) | | 18,250 | | | 18,250 | | | 18,250 | |
| | | | | | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.5% | | | | | | |
The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 5/2023)(G)(K) | | 3,400 | | | 3,400 | | | 2,411 | |
The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 5/2023)(G)(K) | | 900 | | | 900 | | | — | |
| | | | 4,300 | | | 2,411 | |
Telecommunications – 3.8% | | | | | | |
B+T Group Acquisition, Inc.(L) – Line of Credit, $0 available (L+11.0%, 14.1% Cash, Due 12/2024)(K) | | 2,800 | | | 2,800 | | | 2,800 | |
B+T Group Acquisition, Inc.(L) – Term Debt (L+11.0%, 14.1% Cash, Due 12/2024)(K) | | 14,000 | | | 14,000 | | | 14,000 | |
| | | | 16,800 | | | 16,800 | |
| | | | | | |
Total Secured First Lien Debt | | | | $ | 170,058 | | | $ | 147,192 | |
| | | | | | |
Secured Second Lien Debt – 5.3% | | | | | | |
Chemicals, Plastics, and Rubber – 5.3% | | | | | | |
PSI Molded Plastics, Inc. – Term Debt (L+5.5%, 8.6% Cash, Due 1/2024)(K) | | $ | 26,618 | | | $ | 26,618 | | | $ | 23,642 | |
| | | | | | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% | | | | | | |
The Mountain Corporation – Term Debt (L+4.0%, 7.1% Cash, Due 4/2024)(G)(K) | | 11,700 | | | 11,700 | | | — | |
The Mountain Corporation – Delayed Draw Term Debt, $0 available (L+4.0%, 7.1% Cash, Due 4/2024)(G)(K) | | 1,500 | | | 1,500 | | | — | |
| | | | $ | 13,200 | | | — | |
| | | | | | |
Total Secured Second Lien Debt | | | | $ | 39,818 | | | $ | 23,642 | |
| | | | | | |
Preferred Equity – 15.6% | | | | | | |
Chemicals, Plastics, and Rubber – 0.0% | | | | | | |
PSI Molded Plastics, Inc. – Preferred Stock(C)(K) | | 158,598 | | | $ | 19,730 | | | $ | — | |
| | | | | | |
Diversified/Conglomerate Manufacturing – 0.0% | | | | | | |
Edge Adhesives Holdings, Inc.(L) – Preferred Stock(C)(K) | | 8,199 | | | 8,199 | | | — | |
| | | | | | |
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
SEPTEMBER 30, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | |
Company and Investment(A)(B)(D)(E) | | Principal/Shares/ Units(F)(I) | | Cost | | Fair Value |
Diversified/Conglomerate Services – 3.2% | | | | | | |
ImageWorks Display and Marketing Group, Inc. – Preferred Stock(C)(K) | | 67,490 | | | 6,749 | | | 14,051 | |
J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock(C)(K) | | 10,920 | | | 10,920 | | | — | |
The Maids International, LLC – Preferred Stock(C)(K) | | 6,640 | | | 6,640 | | | — | |
| | | | 24,309 | | | 14,051 | |
Home and Office Furnishings, Housewares, and Durable Consumer Products – 9.9% | | | | | | |
Old World Christmas, Inc. – Preferred Stock(C)(K) | | 6,180 | | | — | | | 43,629 | |
| | | | | | |
Mining, Steel, Iron and Non-Precious Metals – 1.1% | | | | | | |
Utah Pacific Bridge & Steel, Ltd. - Preferred Stock(C)(K) | | 6,000 | | | 6,000 | | | 5,118 | |
| | | | | | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% | | | | | | |
The Mountain Corporation – Preferred Stock(C)(K) | | 6,899 | | | 6,899 | | | — | |
| | | | | | |
Telecommunications – 1.4% | | | | | | |
B+T Group Acquisition, Inc.(L) – Preferred Stock(C)(K) | | 14,304 | | | 4,722 | | | 6,342 | |
| | | | | | |
Total Preferred Equity | | | | $ | 69,859 | | | $ | 69,140 | |
| | | | | | |
Common Equity/Equivalents – 1.9% | | | | | | |
Diversified/Conglomerate Services – 1.9% | | | | | | |
Nth Degree Investment Group, LLC – Common Stock(C)(K) | | 14,360,000 | | | $ | 1,219 | | | $ | 8,191 | |
| | | | | | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% | | | | | | |
The Mountain Corporation – Common Stock(C)(K) | | 751 | | | 1 | | | — | |
| | | | | | |
Telecommunications – 0.0% | | | | | | |
B+T Group Acquisition, Inc.(L) – Common Stock Warrants(C)(K) | | 3.5 | % | | — | | | 58 | |
| | | | | | |
Total Common Equity/Equivalents | | | | $ | 1,220 | | | $ | 8,249 | |
| | | | | | |
Total Affiliate Investments | | | | $ | 280,955 | | | $ | 248,223 | |
| | | | | | |
CONTROL INVESTMENTS(O) – 0.2%: | | | | | | |
Common Equity/Equivalents – 0.2% | | | | | | |
Leisure, Amusement, Motion Pictures, and Entertainment – 0.2% | | | | | | |
Gladstone SOG Investments, Inc. - Common Stock(C)(K) | | 100 | | | $ | 620 | | | $ | 713 | |
Total Common Equity/Equivalents | | | | $ | 620 | | | $ | 713 | |
| | | | | | |
Total Control Investments | | | | $ | 620 | | | $ | 713 | |
| | | | | | |
TOTAL INVESTMENTS – 166.8% | | | | $ | 703,218 | | | $ | 737,935 | |
(A)Certain of the securities listed are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, totaling $624.9 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 September 30, 2022, 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 3.1% as of September 30, 2022. 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 September 30, 2022.
(E)Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the Financial Accounting Standards Board ("FASB") Accounting Standards 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.
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
SEPTEMBER 30, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
(G)Debt security is on non-accrual status.
(H)Reserved.
(I)Represents the principal balance, presented in thousands, for debt investments and the number of shares/units held for equity investments. Warrants are represented as a percentage of ownership, as applicable.
(J)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.
(K)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.
(L)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.
(M)Non-Control/Non-Affiliate investments, as defined by the 1940 Act, are those that are neither Control nor Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
(N)Affiliate investments, as defined by the 1940 Act, are those 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.
(O)Control investments, as defined by the 1940 Act, are those where we have the power to exercise a controlling influence over the management or policies of the portfolio company, which may include owning, with the power to vote, more than 25.0% of the issued and outstanding voting securities.
(P)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.
(Q)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, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
| | | | | | | | | | | | | | | | | | | | |
Company and Investment(A)(B)(D)(E) | | Principal/Shares/ Units(F)(I) | | Cost | | Fair Value |
| | | | | | |
NON-CONTROL/NON-AFFILIATE INVESTMENTS(M) – 99.2% | | | | | | |
Secured First Lien Debt – 52.4% | | | | | | |
Diversified/Conglomerate Manufacturing – 1.1% | | | | | | |
Phoenix Door Systems, Inc – Line of Credit, $150 available (L+7.0%, 9.0% Cash (0.3% Unused Fee), Due 3/2024)(J) | | $ | 2,000 | | | $ | 2,000 | | | $ | 1,920 | |
Phoenix Door Systems, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 9/2024)(J) | | 3,200 | | | 3,200 | | | 3,072 | |
| | | | 5,200 | | | 4,992 | |
Diversified/Conglomerate Services – 28.8% | | | | | | |
Bassett Creek Services, Inc. – Term Debt(L+10.0%, 12.0% Cash, Due 4/2023)(K) | | 48,000 | | | 48,000 | | | 48,000 | |
Counsel Press, Inc. – Term Debt (L+11.8%, 12.8% Cash, Due 3/2023)(K) | | 21,100 | | | 21,100 | | | 21,100 | |
Counsel Press, Inc. – Term Debt (L+13.0%, 14.0% Cash, Due 3/2023)(K) | | 6,400 | | | 6,400 | | | 6,400 | |
Horizon Facilities Services, Inc. – Term Debt (L+9.5%, 12.0% Cash, Due 6/2024)(K) | | 27,700 | | | 27,700 | | | 27,700 | |
Mason West, LLC – Term Debt (L+10.0%, 12.5% Cash, Due 7/2025)(K) | | 25,250 | | | 25,250 | | | 25,250 | |
| | | | 128,450 | | | 128,450 | |
Healthcare, Education, and Childcare – 4.5% | | | | | | |
Educators Resource, Inc. – Term Debt (L+10.5%, 13.0% Cash, Due 11/2023) (K) | | 20,000 | | | 20,000 | | | 20,000 | |
| | | | | | |
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) (K) | | 17,700 | | | 17,700 | | | 17,700 | |
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023) (K) | | 6,850 | | | 6,850 | | | 6,850 | |
| | | | 24,550 | | | 24,550 | |
Hotels, Motels, Inns, and Gaming Total – 6.2% | | | | | | |
Nocturne Villa Rentals, Inc. – Line of Credit, $2,000 available (L+8.0%, 10.0% Cash, Due 6/2023)(K) | | — | | | — | | | — | |
Nocturne Villa Rentals, Inc. – Term Debt (L+10.5%, 12.5% Cash, Due 6/2026)(K) | | 27,700 | | | 27,700 | | | 27,700 | |
| | | | 27,700 | | | 27,700 | |
Leisure, Amusement, Motion Pictures, and Entertainment – 6.3% | | | | | | |
Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 5/2025)(K) | | 27,981 | | | 27,981 | | | 27,981 | |
| | | | | | |
Total Secured First Lien Debt | | | | $ | 233,881 | | | $ | 233,673 | |
| | | | | | |
Secured Second Lien Debt – 15.0% | | | | | | |
Aerospace and Defense – 5.7% | | | | | | |
Galaxy Technologies Holdings, Inc. – Term Debt (L+4.1%, 7.1% Cash, Due 10/2026)(K) | | $ | 6,500 | | | $ | 6,500 | | | $ | 6,500 | |
Galaxy Technologies Holdings, Inc. – Term Debt (L+7.0%, 10.0% Cash, Due 10/2026)(K) | | 18,796 | | | 18,796 | | | 18,796 | |
| | | | 25,296 | | | 25,296 | |
Automobile – 0.3% | | | | | | |
Country Club Enterprises, LLC – Term Debt (L+8.0%, 10.0% Cash, Due 7/2027)(J) | | 1,500 | | | 1,500 | | | 1,498 | |
Country Club Enterprises, LLC - Guaranty ($1,000) (Q) | | | | — | | | — | |
| | | | 1,500 | | | 1,498 | |
| | | | | | |
Cargo Transport – 2.9% | | | | | | |
Diligent Delivery Systems – Term Debt (L+9.0%, 11.0% Cash, Due 11/2022)(J) | | 13,000 | | | 12,987 | | | 13,000 | |
| | | | | | |
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) – 3.1% | | | | | | |
SFEG Holdings, Inc. – Term Debt (L+7.0%, 9.0% Cash, Due 11/2024)(G)(J) | | 3,128 | | | 3,128 | | | 2,909 | |
SFEG Holdings, Inc. – Term Debt (L+7.0%, 9.0% Cash, Due 11/2024)(G)(J) | | 11,736 | | | 11,736 | | | 10,914 | |
| | | | 14,864 | | | 13,823 | |
| | | | | | |
Total Secured Second Lien Debt | | | | $ | 67,947 | | | $ | 66,917 | |
| | | | | | |
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
MARCH 31, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
| | | | | | | | | | | | | | | | | | | | |
Company and Investment(A)(B)(D)(E) | | Principal/Shares/ Units(F)(I) | | Cost | | Fair Value |
| | | | | | |
Preferred Equity – 31.4% | | | | | | |
Diversified/Conglomerate Services – 15.2% | | | | | | |
Bassett Creek Services, Inc. – Preferred Stock(C)(K) | | 4,900 | | | $ | 4,900 | | | $ | 17,150 | |
Counsel Press, Inc. – Preferred Stock(C)(K) | | 6,995 | | | 6,995 | | | 25,374 | |
Horizon Facilities Services, Inc. – Preferred Stock(C)(K) | | 10,080 | | | 10,080 | | | 17,807 | |
Mason West, LLC – Preferred Stock(C)(K) | | 11,206 | | | 11,206 | | | 7,553 | |
| | | | 33,181 | | | 67,884 | |
Healthcare, Education, and Childcare – 4.3% | | | | | | |
Educators Resource, Inc. – Preferred Stock(C)(K) | | 8,560 | | | 8,560 | | | 19,252 | |
| | | | | | |
Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.6% | | | | | | |
Brunswick Bowling Products, Inc. – Preferred Stock(C)(K) | | 6,653 | | | 6,653 | | | 21,485 | |
Ginsey Home Solutions, Inc. – Preferred Stock(C)(K) | | 19,280 | | | 9,583 | | | 3,263 | |
| | | | 16,236 | | | 24,748 | |
Hotels, Motels, Inns, and Gaming Total – 2.3% | | | | | | |
Nocturne Villa Rentals, Inc. – Preferred Stock (C)(K) | | 6,600 | | | 6,600 | | | 10,223 | |
| | | | | | |
Leisure, Amusement, Motion Pictures, and Entertainment – 4.0% | | | | | | |
Schylling, Inc. – Preferred Stock(C)(K) | | 4,000 | | | 4,000 | | | 17,820 | |
| | | | | | |
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0% | | | | | | |
SFEG Holdings, Inc. – Preferred Stock(C)(K) | | 29,577 | | | 4,643 | | | — | |
| | | | | | |
Total Preferred Equity | | | | $ | 73,220 | | | $ | 139,927 | |
| | | | | | |
Common Equity/Equivalents – 0.4% | | | | | | |
Aerospace and Defense – 0.0% | | | | | | |
Galaxy Technologies Holdings, Inc. – Common Stock(C)(K) | | 16,957 | | | $ | 11,513 | | | $ | — | |
| | | | | | |
Cargo Transport – 0.4% | | | | | | |
Diligent Delivery Systems – Common Stock Warrants(C)(K) | | 8 | % |
| 500 | | | 1,533 | |
| | | | | | |
Diversified/Conglomerate Manufacturing– 0.0% | | | | | | |
Phoenix Door Systems, Inc. – Common Stock(C)(K) | | 3,195 | | | 1,452 | | | — | |
| | | | | | |
Home and Office Furnishings, Housewares, and Durable Consumer Products – 0.0% | | | | | | |
Ginsey Home Solutions, Inc. – Common Stock(C)(K) | | 63,747 | | | 8 | | | — | |
| | | | | | |
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0% | | | | | | |
SFEG Holdings, Inc. – Common Stock(C)(K) | | 221,500 | | | 222 | | | — | |
| | | | | | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% | | | | | | |
Funko Acquisition Holdings, LLC(L) – Common Units(C)(P) | | 6,290 | | | 30 | | | 74 | |
| | | | | | |
Total Common Equity/Equivalents | | | | $ | 13,725 | | | $ | 1,607 | |
| | | | | | |
Total Non-Control/Non-Affiliate Investments | | | | $ | 388,773 | | | $ | 442,124 | |
| | | | | | |
AFFILIATE INVESTMENTS(N) – 60.8% | | | | | | |
Secured First Lien Debt – 42.9% | | | | | | |
Chemicals, Plastics, and Rubber – 6.0% | | | | | | |
PSI Molded Plastics, Inc. – Term Debt (L+5.5%, 7.0% Cash, Due 1/2024)(K) | | $ | 26,618 | | | $ | 26,618 | | | $ | 26,618 | |
| | | | | | |
Diversified/Conglomerate Manufacturing – 2.0% | | | | | | |
Edge Adhesives Holdings, Inc.(L) – Term Debt (L+5.5%, 7.5% Cash, Due 8/2024)(J) | | 9,210 | | | 9,210 | | | 9,072 | |
| | | | | | |
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
MARCH 31, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
| | | | | | | | | | | | | | | | | | | | |
Company and Investment(A)(B)(D)(E) | | Principal/Shares/ Units(F)(I) | | Cost | | Fair Value |
| | | | | | |
Diversified/Conglomerate Services – 20.5% | | | | | | |
ImageWorks Display and Marketing Group, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 11/2022)(K) | | 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) | | 16,500 | | | 16,500 | | | 15,023 | |
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+10.3%, 11.8% Cash, Due 10/2024) (G)(K) | | 26,000 | | | 26,000 | | | 23,672 | |
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+6.0%, 8.0% Cash, Due 3/2023) (G)(K) | | 2,438 | | | 2,438 | | | 2,219 | |
J.R. Hobbs Co. - Atlanta, LLC - Guaranty ($9,250) (Q) | | — | | | — | | | — | |
The Maids International, LLC – Term Debt (L+10.5%, 12.0% Cash, Due 3/2025)(K) | | 28,560 | | | 28,560 | | | 28,560 | |
| | | | 95,498 | | | 91,474 | |
Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.6% | | | | | | |
Old World Christmas, Inc. – Secured First Lien Term Loan (L+9.5%, 11.0% Cash, Due 12/2025)(K) | | 25,000 | | | 25,000 | | | 25,000 | |
| | | | | | |
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)(K) | | — | | | — | | | — | |
Utah Pacific Bridge & Steel, Ltd. (L+10.0%, 11.5% Cash, Due 7/2026)(K) | | 18,250 | | | 18,250 | | | 18,250 | |
| | | | 18,250 | | | 18,250 | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 1.0% | | | | | | |
The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 5/2022)(G)(K) | | 3,400 | | | 3,400 | | | 3,400 | |
The Mountain Corporation – Line of Credit, $100 available (L+5.0%, 9.0% Cash, Due 5/2023)(G)(K) | | 800 | | | 800 | | | 800 | |
| | | | 4,200 | | | 4,200 | |
Telecommunications – 3.7% | | | | | | |
B+T Group Acquisition, Inc.(L) – Line of Credit, $0 available (L+11.0%, 13.0% Cash, Due 12/2024)(K) | | 2,800 | | | 2,800 | | | 2,800 | |
B+T Group Acquisition, Inc.(L) – Term Debt (L+11.0%, 13.0% Cash, Due 12/2024)(K) | | 14,000 | | | 14,000 | | | 14,000 | |
| | | | 16,800 | | | 16,800 | |
| | | | | | |
Total Secured First Lien Debt | | | | $ | 195,576 | | | $ | 191,414 | |
| | | | | | |
Secured Second Lien Debt – 0.2% | | | | | | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.2% | | | | | | |
The Mountain Corporation – Term Debt (L+4.0%, 7.0% Cash, Due 4/2024)(G)(K) | | $ | 11,700 | | | $ | 11,700 | | | $ | 923 | |
The Mountain Corporation – Delayed Draw Term Debt, $0 available (L+4.0%, 7.0% Cash, Due 4/2024)(G)(K) | | 1,500 | | | 1,500 | | | 118 | |
| | | | $ | 13,200 | | | $ | 1,041 | |
| | | | | | |
Total Secured Second Lien Debt | | | | $ | 13,200 | | | $ | 1,041 | |
| | | | | | |
Preferred Equity – 17.4% | | | | | | |
Chemicals, Plastics, and Rubber – 0.0% | | | | | | |
PSI Molded Plastics, Inc. – Preferred Stock(C)(K) | | 158,598 | | | $ | 19,730 | | | $ | — | |
| | | | | | |
Diversified/Conglomerate Manufacturing – 0.0% | | | | | | |
Edge Adhesives Holdings, Inc.(L) – Preferred Stock(C)(K) | | 8,199 | | | 8,199 | | | — | |
| | | | | | |
Diversified/Conglomerate Services – 4.3% | | | | | | |
ImageWorks Display and Marketing Group, Inc. – Preferred Stock(C)(K) | | 67,490 | | | 6,749 | | | 16,405 | |
J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock(C)(K) | | 10,920 | | | 10,920 | | | — | |
The Maids International, LLC – Preferred Stock(C)(K) | | 6,640 | | | 6,640 | | | 2,679 | |
| | | | 24,309 | | | 19,084 | |
| | | | | | |
Home and Office Furnishings, Housewares, and Durable Consumer Products – 8.5% | | | | | | |
Old World Christmas, Inc. – Preferred Stock(C)(K) | | 6,180 | | | — | | | 37,842 | |
| | | | | | |
Mining, Steel, Iron and Non-Precious Metals –1.3% | | | | | | |
Utah Pacific Bridge & Steel, Ltd. - Preferred Stock(C)(K) | | 6,000 | | | 6,000 | | | 6,000 | |
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
MARCH 31, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
| | | | | | | | | | | | | | | | | | | | |
Company and Investment(A)(B)(D)(E) | | Principal/Shares/ Units(F)(I) | | Cost | | Fair Value |
| | | | | | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% | | | | | | |
The Mountain Corporation – Preferred Stock(C)(K) | | 6,899 | | | 6,899 | | | — | |
| | | | | | |
Telecommunications – 3.3% | | | | | | |
B+T Group Acquisition, Inc.(L) – Preferred Stock(C)(K) | | 14,304 | | | 4,722 | | | 14,746 | |
| | | | | | |
Total Preferred Equity | | | | $ | 69,859 | | | $ | 77,672 | |
| | | | | | |
Common Equity/Equivalents – 0.3% | | | | | | |
Diversified/Conglomerate Services – 0.1% | | | | | | |
Nth Degree Investment Group, LLC – Common Stock(C)(K) | | 14,360,000 | | | $ | 1,219 | | | $ | 511 | |
| | | | | | |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% | | | | | | |
The Mountain Corporation – Common Stock(C)(K) | | 751 | | | 1 | | | — | |
| | | | | | |
Telecommunications – 0.2% | | | | | | |
B+T Group Acquisition, Inc.(L) – Common Stock Warrants(C)(K) | | 3.5 | % | | — | | | 921 | |
| | | | | | |
Total Common Equity/Equivalents | | | | $ | 1,220 | | | $ | 1,432 | |
| | | | | | |
Total Affiliate Investments | | | | $ | 279,855 | | | $ | 271,559 | |
| | | | | | |
CONTROL INVESTMENTS(O) – 0.2%: | | | | | | |
Common Equity/Equivalents – 0.2% | | | | | | |
Leisure, Amusement, Motion Pictures, and Entertainment – 0.2% | | | | | | |
Gladstone SOG Investments, Inc. - Common Stock(C)(K) | | 100 | | | $ | 620 | | | $ | 713 | |
Total Common Equity/Equivalents | | | | $ | 620 | | | $ | 713 | |
| | | | | | |
Total Control Investments | | | | $ | 620 | | | $ | 713 | |
| | | | | | |
TOTAL INVESTMENTS – 160.2%(R) | | | | $ | 669,248 | | | $ | 714,396 | |
(A)Certain of the securities listed are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, totaling $537.5 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 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, 2022, our investment in 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 0.5% as of March 31, 2022. 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, 2022.
(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—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 March 31, 2022.
(I)Represents the principal balance, presented in thousands, for debt investments and the number of shares/units held for equity investments. Warrants are represented as a percentage of ownership, as applicable.
(J)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.
(K)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.
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
MARCH 31, 2022
(DOLLAR AMOUNTS IN THOUSANDS)
(L)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.
(M)Non-Control/Non-Affiliate investments, as defined by the 1940 Act, are those that are neither Control nor Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
(N)Affiliate investments, as defined by the 1940 Act, are those 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.
(O)Control investments, as defined by the 1940 Act, are those where we have the power to exercise a controlling influence over the management or policies of the portfolio company, which may include owning, with the power to vote, more than 25.0% of the issued and outstanding voting securities.
(P)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.
(Q)Refer to Note 10—Commitments and Contingencies in the accompanying Notes to Consolidated Financial Statements for additional information regarding this guaranty.
(R)Cumulative gross unrealized appreciation for federal income tax purposes is $140.8 million; cumulative gross unrealized depreciation for federal income tax purposes is $97.1 million. Cumulative net unrealized appreciation is $43.8 million, based on a tax cost of $670.6 million.
GLADSTONE INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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. As of September 30, 2022, our investment portfolio was comprised of 76.6% in debt investments and 23.4% 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 are externally managed by Gladstone Management Corporation (the “Adviser”), an affiliate of ours and 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 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 six months ended September 30, 2022 are not necessarily indicative of results that ultimately may be achieved for the fiscal year ending March 31, 2023 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, 2022, as filed with the SEC on May 11, 2022.
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.
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 December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its investment adviser as a valuation designee to perform fair value determinations for its investment portfolio, subject to the active oversight of such board. Our board of directors (the “Board of Directors”) has approved investment valuation policies and procedures pursuant to Rule 2a-5 (the “Policy”) and, in July 2022, designated the Adviser to serve as the Board of Directors’ valuation designee.
In accordance with the 1940 Act and SEC Rule 2a-5, our 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 Policy and for overseeing the valuation designee. Such review and oversight includes receiving written fair value determinations and supporting materials provided by the valuation designee, in coordination with the Administrator and with the oversight by the Company’s chief valuation officer (collectively, the “Valuation Team”). The Valuation Committee of our Board of Directors (comprised entirely of independent directors) meets to review the valuation determinations and supporting materials, discusses the information provided by the Valuation Team, determines whether the Valuation Team has followed the Policy, and reviews other facts and circumstances, including current valuation risks, conflicts of interest, material valuation matters, appropriateness of valuation methodologies, back-testing results, price challenges/overrides, and ongoing monitoring and oversight of pricing services. After the Valuation Committee concludes its meeting, it and the chief valuation officer, representing the Valuation Designee, present the Valuation Committee’s findings to the entire Board of Directors so that the full Board of Directors may review and approve in good faith the Valuation Designee’s determined fair values 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 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.
•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 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 September 30, 2022, our loans to J.R. Hobbs Co. – Atlanta, LLC (“J.R. Hobbs”) and The Mountain Corporation (“The Mountain”) were on non-accrual status, with an aggregate debt cost basis of $63.4 million, or 11.8% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of $32.8 million, or 6.6% of the fair value of all debt investments in our portfolio. As of March 31, 2022, our loans to J.R. Hobbs, The Mountain, and SFEG Holdings, Inc. were on non-accrual status, with an aggregate debt cost basis of $77.2 million, or 15.1% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of $60.0 million, or 12.2% 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 September 30, 2022 and March 31, 2022, 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 June 2022, the FASB issued Accounting Standards Update 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”), which clarifies the measurement and presentation of fair value for equity securities subject to contractual restrictions that prohibit the sale of the equity security. ASU 2022-03 is effective for annual reporting periods beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. Our adoption of ASU 2022-03 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