GLADSTONE INVESTMENT CORPORATIONDE 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Management’s Annual Report on Internal Controls Over Financial Reporting 70 Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 71 Consolidated Statements of Assets and Liabilities as of March 31, 2023 and 2022 73 Consolidated Statements of Operations for the years ended March 31, 2023 , 2022 and 2021 74 Consolidated Statements of Changes in Net Assets for the years ended March 31, 2023 , 2022 and 2021 75 Consolidated Statements of Cash Flows for the years ended March 31, 2023 , 2022 and 2021 76 Consolidated Schedules of Investments as of March 31, 2023 and 2022 83 Notes to Consolidated Financial Statements 88 69 Table of Contents Management’s Annual Report on Internal Control over Financial Reporting To the Board of Directors and Stockholders of Gladstone Investment Corporation: Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and include those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets; (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with appropriate authorizations; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we assessed the effectiveness of our internal control over financial reporting as of March 31, 2023, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013) . Based on its assessment, management has concluded that our internal control over financial reporting was effective as of March 31, 2023. May 10, 2023 70 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Gladstone Investment Corporation Opinion on the Financial Statements We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Gladstone Investment Corporation and its subsidiaries (the “Company”) as of March 31, 2023 and 2022, and the related consolidated statements of operations, of changes in net assets and of cash flows for each of the three years in the period ended March 31, 2023, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and 2022, and the results of its operations, changes in its net assets, and its cash flows for each of the three years in the period ended March 31, 2023 in conformity with accounting principles generally accepted in the United States of America. We have also previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of assets and liabilities, including the consolidated schedules of investments, of the Company as of March 31, 2021, 2020, 2019, 2018, 2017, 2016, 2015, and 2014, and the related consolidated statements of operations, changes in net assets and cash flows for the years ended March 31, 2020, 2019, 2018, 2017, 2016, 2015, and 2014 (none of which are presented herein), and we expressed unqualified opinions on those consolidated financial statements. In our opinion, the information set forth in the Senior Securities table of the Company for each of the ten years in the period ended March 31, 2023, appearing on pages 48-50 under Item 5 of this Form 10-K, is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our procedures included confirmation of securities owned as of March 31, 2023 and 2022 by correspondence with the custodian, portfolio company investees, and an escrow agent; when replies were not received, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 71 Table of Contents Valuation of Level 3 Investments As described in Notes 2 and 3 to the consolidated financial statements, the Company held $753.5 million of total level 3 investments at fair value as of March 31, 2023. Management uses significant unobservable inputs in estimating the fair value of its level 3 investments, including (i) with respect to investments valued using a total enterprise value, portfolio company earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA multiples, revenue and revenue multiples, or a discounted cash flow analysis using estimated risk-adjusted discount rates; (ii) with respect to investments valued using a yield analysis, a modified discount rate; and (iii) with respect to investments valued using market quotations for which a limited market exists, the lower indicative bid price in the bid-to-ask price range. The principal considerations for our determination that performing procedures relating to the valuation of level 3 investments is a critical audit matter are (i) the significant judgment by management to determine the fair value of these level 3 investments using a total enterprise value or yield analysis due to the use of significant unobservable inputs, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to the EBITDA and EBITDA multiples and revenue and revenue multiples used in a total enterprise value and the modified discount rate used in a yield analysis, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, either (i) testing management’s process for determining the fair value estimate, including testing the completeness and accuracy of data provided by management, evaluating the appropriateness of management’s valuation methods, and evaluating the reasonableness of the EBITDA and EBITDA multiples and revenue and revenue multiples used in a total enterprise value and the modified discount rate used in a yield analysis by considering current and past performance of the investment, consistency of the unobservable inputs with external market data and evidence obtained in other areas of the audit, and management’s historical forecasting accuracy, or (ii) the involvement of professionals with specialized skill and knowledge to assist in developing an independent fair value estimate for certain level 3 investments and comparison of management’s estimate to the independently developed estimate. Developing an independent fair value estimate involved testing the completeness and accuracy of data provided by management and independently developing significant unobservable inputs related to the EBITDA and EBITDA multiples or revenue and revenue multiples for those investments valued using a total enterprise value. /s/ PricewaterhouseCoopers LLP Washington, DC May 10, 2023 We have served as the Company’s auditor since 2005. 72 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) March 31, 2023 2022 ASSETS Investments at fair value Non-Control/Non-Affiliate investments (Cost of $ 429,305 and $ 388,773 , respectively) $ 496,875 $ 442,124 Affiliate investments (Cost of $ 276,055 and $ 279,855 , respectively) 255,955 271,559 Control investments (Cost of $ 15,270 and $ 620 , respectively) 713 713 Cash and cash equivalents 2,683 14,190 Restricted cash and cash equivalents 565 305 Interest receivable 3,038 3,042 Due from administrative agent 3,899 6,406 Deferred financing costs, net 431 895 Other assets, net 1,485 1,178 TOTAL ASSETS $ 765,644 $ 740,412 LIABILITIES Borrowings: Line of credit at fair value (Cost of $ 35,200 and $ 0 , respectively) $ 35,171 $ — Notes payable, net 257,436 256,252 Secured borrowing — 5,096 Total borrowings 292,607 261,348 Accounts payable and accrued expenses 786 799 Interest payable 2,309 2,190 Fees due to Adviser (A) 28,919 29,288 Fee due to Administrator (A) 716 627 Other liabilities 565 330 TOTAL LIABILITIES 325,902 294,582 Commitments and contingencies (B) NET ASSETS $ 439,742 $ 445,830 ANALYSIS OF NET ASSETS Common stock, $ 0.001 par value per share, 100,000,000 shares authorized; 33,591,505 and 33,205,023 shares issued and outstanding, respectively $ 34 $ 33 Capital in excess of par value 401,798 397,948 Cumulative net unrealized appreciation of investments 32,913 45,148 Cumulative net unrealized depreciation of other 29 — Overdistributed net investment income ( 5,527 ) ( 12,995 ) Accumulated net realized gain in excess of distributions 10,495 15,696 Total distributable earnings 37,910 47,849 TOTAL NET ASSETS $ 439,742 $ 445,830 NET ASSET VALUE PER SHARE $ 13.09 $ 13.43 (A) Refer to Note 4 — Related Party Transactions in the accompanying Notes to Consolidated Financial Statements for additional information. (B) Refer to Note 11 — Commitments and Contingencies in the accompanying Notes to Consolidated Financial Statements for additional information. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 73 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Year Ended March 31, 2023 2022 2021 INVESTMENT INCOME Interest income: Non-Control/Non-Affiliate investments $ 41,872 $ 34,531 $ 26,031 Affiliate investments 18,323 24,617 20,208 Control investments — 500 920 Cash and cash equivalents 81 1 5 Total interest income 60,276 59,649 47,164 Dividend income: Non-Control/Non-Affiliate investments 4,847 6 910 Affiliate investments 6,018 2,589 6,165 Total dividend income 10,865 2,595 7,075 Success fee income: Non-Control/Non-Affiliate investments 9,801 2,647 871 Affiliate investments 601 7,661 1,517 Total success fee income 10,402 10,308 2,388 Total investment income 81,543 72,552 56,627 EXPENSES Base management fee (A) 14,798 14,113 12,115 Loan servicing fee (A) 7,880 7,178 7,082 Incentive fee (A) 8,880 26,360 8,778 Administration fee (A) 1,811 1,806 1,619 Interest expense on borrowings 15,877 13,078 4,440 Dividends on mandatorily redeemable preferred stock — 2,306 8,674 Amortization of deferred financing costs and discounts 1,802 1,803 1,750 Professional fees 1,916 1,431 1,935 Other general and administrative expenses 3,270 3,162 2,327 Expenses before credits from Adviser 56,234 71,237 48,720 Credits to base management fee – loan servicing fee (A) ( 7,880 ) ( 7,178 ) ( 7,082 ) Credits to fees from Adviser - other (A) ( 3,811 ) ( 6,497 ) ( 2,949 ) Total expenses, net of credits to fees 44,543 57,562 38,689 NET INVESTMENT INCOME $ 37,000 $ 14,990 $ 17,938 REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss): Non-Control/Non-Affiliate investments $ 7,561 $ 256 $ 6,401 Affiliate investments 3,469 14,186 4,973 Control investments ( 277 ) — — Other — ( 1,998 ) ( 782 ) Total net realized gain 10,753 12,444 10,592 Net unrealized appreciation (depreciation): Non-Control/Non-Affiliate investments 14,218 52,529 ( 14,718 ) Affiliate investments ( 23,792 ) 25,378 30,170 Control investments ( 2,661 ) ( 3,025 ) ( 1,528 ) Other 29 — — Total net unrealized appreciation (depreciation) ( 12,206 ) 74,882 13,924 Net realized and unrealized gain (loss) ( 1,453 ) 87,326 24,516 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 35,547 $ 102,316 $ 42,454 BASIC AND DILUTED PER COMMON SHARE: Net investment income $ 1.11 $ 0.45 $ 0.54 Net increase in net assets resulting from operations $ 1.07 $ 3.08 $ 1.28 WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic and diluted 33,311,785 33,205,023 33,176,760 (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. 74 Table of Contents G LADSTONE INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS) Year Ended March 31, 2023 2022 2021 NET ASSETS, BEGINNING OF YEAR $ 445,830 $ 382,364 $ 369,031 OPERATIONS Net investment income $ 37,000 $ 14,990 $ 17,938 Net realized gain on investments 10,753 14,442 11,374 Net realized loss on other — ( 1,998 ) ( 782 ) Net unrealized appreciation (depreciation) of investments ( 12,235 ) 74,882 13,924 Net unrealized depreciation of other 29 — — Net increase in net assets from operations 35,547 102,316 42,454 DISTRIBUTIONS (A) Distributions to common stockholders from net investment income ( $ 0.92 , $ 0.91 , and $ 0.83 per share, respectively) ( 30,833 ) ( 30,244 ) ( 27,407 ) Distributions to common stockholders from cumulative realized gains ( $ 0.49 , $ 0.26 , and $ 0.10 per share, respectively) ( 16,217 ) ( 8,606 ) ( 3,451 ) Net decrease in net assets from distributions ( 47,050 ) ( 38,850 ) ( 30,858 ) CAPITAL ACTIVITY Issuance of common stock 5,492 — 1,772 Discounts, commissions, and offering costs for issuance of common stock ( 77 ) — ( 35 ) Net increase in net assets from capital activity 5,415 — 1,737 TOTAL INCREASE (DECREASE) IN NET ASSETS ( 6,088 ) 63,466 13,333 NET ASSETS, END OF YEAR (A) $ 439,742 $ 445,830 $ 382,364 (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. 75 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) Year Ended March 31, 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net increase in net assets resulting from operations $ 35,547 $ 102,316 $ 42,454 Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in) provided by operating activities: Purchase of investments ( 133,756 ) ( 92,738 ) ( 95,272 ) Principal repayments of investments 52,300 51,398 20,734 Net proceeds from the sale of investments 35,533 50,018 31,047 Net realized gain on investments ( 10,753 ) ( 14,442 ) ( 11,374 ) Net realized loss on other — 1,998 782 Net unrealized depreciation (appreciation) of investments 12,235 ( 74,882 ) ( 13,924 ) Net unrealized depreciation of other ( 29 ) — — Amortization of premiums, discounts, and acquisition costs, net ( 12 ) ( 18 ) ( 18 ) Amortization of deferred financing costs and discounts 1,802 1,803 1,750 Bad debt expense, net of recoveries 362 792 88 Changes in assets and liabilities: Decrease (increase) in interest receivable 4 ( 131 ) 16 Decrease (increase) in due from administrative agent 2,507 ( 5,242 ) ( 393 ) (Increase) decrease in other assets, net ( 446 ) 209 ( 19 ) (Decrease) increase in accounts payable and accrued expenses ( 13 ) 236 ( 521 ) Increase (decrease) in interest payable 119 1,599 453 (Decrease) increase in fees due to Adviser (A) ( 435 ) 13,588 8,442 Increase (decrease) in fee due to Administrator (A) 89 50 ( 5 ) Increase (decrease) in other liabilities 442 45 ( 13,972 ) Net cash (used in) provided by operating activities ( 4,504 ) 36,599 ( 29,732 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock 5,492 — 1,772 Discounts, commissions, and offering costs for issuance of common stock ( 77 ) — ( 31 ) Proceeds from line of credit 102,500 111,700 125,900 Repayments on line of credit ( 67,300 ) ( 134,100 ) ( 152,700 ) Proceeds from issuance of notes payable — 134,550 127,938 Proceeds from issuance of mandatorily redeemable preferred stock — — 19,276 Redemption of mandatorily redeemable preferred stock — ( 94,371 ) ( 57,500 ) Deferred financing and offering costs ( 308 ) ( 3,431 ) ( 5,727 ) Distributions paid to common stockholders ( 47,050 ) ( 38,850 ) ( 30,858 ) Net cash (used in) provided by financing activities ( 6,743 ) ( 24,502 ) 28,070 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS ( 11,247 ) 12,097 ( 1,662 ) CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF YEAR 14,495 2,398 4,060 CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, END OF YEAR $ 3,248 $ 14,495 $ 2,398 CASH PAID FOR INTEREST $ 14,103 $ 9,837 $ 3,169 (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. 76 Table of Contents Supplemental disclosures of non-cash operating activities: For the year ended March 31, 2023: • 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. • In December 2022, we replaced our previously outstanding secured second lien term loan and second lien delayed draw term loan to The Mountain with a total aggregate cost basis of $ 13.2 million with a new $ 3.2 million secured second lien term loan, which resulted in a realized loss of $ 10.0 million. For the year ended March 31, 2022: • In March 2022, we replaced our previously outstanding first lien term loan to J.R. Hobbs with a total cost basis of $ 36.0 million with a new $ 26.0 million first lien term loan, which resulted in a realized loss of $ 10.0 million. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 77 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2023 (DOLLAR AMOUNTS IN THOUSANDS) Company and Investment (A)(B)(D)(E) Principal/Shares/ Units (F)(H) Cost Fair Value NON-CONTROL/NON-AFFILIATE INVESTMENTS (L) – 113.0 % Secured First Lien Debt – 63.6 % Buildings and Real Estate Total – 8.7 % Dema/Mai Holdings, Inc. – Term Debt (L+ 11.0 %, 15.9 % Cash, Due 7/2027) (J) $ 38,250 $ 38,250 $ 38,250 Diversified/Conglomerate Manufacturing – 1.2 % Phoenix Door Systems, Inc. – Line of Credit, $ 0 available (L+ 7.0 %, 11.9 % Cash ( 0.3 % Unused Fee), Due 3/2024) (I) 2,550 2,550 2,391 Phoenix Door Systems, Inc. – Term Debt (L+ 11.0 %, 15.9 %% Cash, Due 9/2024) (I) 3,200 3,200 3,000 5,750 5,391 Diversified/Conglomerate Services – 25.1 % Counsel Press, Inc. – Term Debt (L+ 11.8 %, 16.6 % Cash, Due 3/2024) (J) 21,100 21,100 21,100 Counsel Press, Inc. – Term Debt (L+ 13.0 %, 17.9 % Cash, Due 3/2024) (J) 6,400 6,400 6,400 Horizon Facilities Services, Inc. – Term Debt (L+ 7.5 %, 12.4 % Cash, Due 6/2026) (J) 57,700 57,700 57,700 Mason West, LLC – Term Debt (L+ 10.0 %, 14.9 % Cash, Due 7/2025) (J) 25,250 25,250 25,250 110,450 110,450 Healthcare, Education, and Childcare – 4.5 % Educators Resource, Inc. – Term Debt (L+ 10.5 %, 15.4 % Cash, Due 11/2023) (J) 20,000 20,000 20,000 Home and Office Furnishings, Housewares, and Durable Consumer Products – 8.0 % Brunswick Bowling Products, Inc. – Term Debt (L+ 10.0 %, 14.9 % Cash, Due 1/2026) (J) 17,700 17,700 17,700 Brunswick Bowling Products, Inc. – Term Debt (L+ 10.0 %, 14.9 % Cash, Due 1/2026) (J) 6,850 6,850 6,850 Ginsey Home Solutions, Inc. – Term Debt (L+ 10.0 %, 14.9 %% Cash, Due 11/2025) (J) 12,200 12,200 10,676 36,750 35,226 Hotels, Motels, Inns, and Gaming Total – 9.7 % Nocturne Luxury Villas, Inc. – Line of Credit, $ 2,000 available (L+ 8.0 %, 12.9 % Cash, Due 6/2024) (J) — — — Nocturne Luxury Villas, Inc. – Term Debt (L+ 10.5 %, 15.4 % Cash, Due 6/2026) (J) 42,450 42,450 42,450 42,450 42,450 Leisure, Amusement, Motion Pictures, and Entertainment – 6.4 % Schylling, Inc. – Term Debt (L+ 11.0 %, 15.9 % Cash, Due 5/2025) (J) 27,981 27,981 27,981 Total Secured First Lien Debt $ 281,631 $ 279,748 Secured Second Lien Debt – 11.6 % Aerospace and Defense – 5.0 % Galaxy Technologies Holdings, Inc. – Term Debt (L+ 4.1 %, 9.0 % Cash, Due 10/2026) (J) $ 6,900 $ 6,900 $ 5,965 Galaxy Technologies Holdings, Inc. – Term Debt (L+ 7.0 %, 11.9 % Cash, Due10/2026) (J) 18,796 18,796 16,250 25,696 22,215 Cargo Transport – 3.0 % Diligent Delivery Systems – Term Debt (L+ 9.0 %, 13.9 % Cash, Due 5/2024) (I) 13,000 13,000 12,983 Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 3.6 % SFEG Holdings, Inc. – Term Debt (L+ 7.0 %, 11.9 %% Cash, Due 11/2024) (J) 3,128 3,128 3,128 SFEG Holdings, Inc. – Term Debt (L+ 7.0 %, 11.9 % Cash, Due 11/2024) (J) 12,516 12,516 12,516 15,644 15,644 Total Secured Second Lien Debt $ 54,340 $ 50,842 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 78 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2023 (DOLLAR AMOUNTS IN THOUSANDS) Company and Investment (A)(B)(D)(E) Principal/Shares/ Units (F)(H) Cost Fair Value Preferred Equity – 37.4 % Buildings and Real Estate – 5.1 % Dema/Mai Holdings, Inc. - Preferred Equity (C)(J) 21,000 $ 21,000 $ 22,321 Diversified/Conglomerate Services – 11.6 % Counsel Press, Inc. – Preferred Stock (C)(J) 6,995 6,995 27,885 Horizon Facilities Services, Inc. – Preferred Stock (C)(J) 10,080 — 12,345 Mason West, LLC – Preferred Stock (C)(J) 11,206 11,206 10,940 18,201 51,170 Healthcare, Education, and Childcare – 4.0 % Educators Resource, Inc. – Preferred Stock (C)(J) 8,560 8,560 17,445 Home and Office Furnishings, Housewares, and Durable Consumer Products – 7.7 % Brunswick Bowling Products, Inc. – Preferred Stock (C)(J) 6,653 6,653 33,969 Ginsey Home Solutions, Inc. – Preferred Stock (C)(J) 19,280 9,583 — 16,236 33,969 Hotels, Motels, Inns, and Gaming – 3.7 % Nocturne Luxury Villas, Inc. – Preferred Stock (C)(J) 6,600 6,600 16,263 Leisure, Amusement, Motion Pictures, and Entertainment – 4.3 % Schylling, Inc. – Preferred Stock (C)(J) 4,000 4,000 18,922 Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 1.0 % SFEG Holdings, Inc. – Preferred Stock (C)(J) 29,577 4,643 4,444 Total Preferred Equity $ 79,240 $ 164,534 Common Equity/Equivalents – 0.4 % Aerospace and Defense – 0.0 % Galaxy Technologies Holdings, Inc. – Common Stock (C)(J) 16,957 $ 11,513 $ — Cargo Transport – 0.4 % Diligent Delivery Systems – Common Stock Warrants (C)(J) 8 % 500 1,724 Diversified/Conglomerate Manufacturing – 0.0 % Phoenix Door Systems, Inc. – Common Stock (C)(J) 4,221 1,830 — Home and Office Furnishings, Housewares, and Durable Consumer Products – 0.0 % Ginsey Home Solutions, Inc. – Common Stock (C)(J) 63,747 8 — Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0 % SFEG Holdings, Inc. – Common Stock (C)(J) 221,500 222 — Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0 % Funko Acquisition Holdings, LLC (K) – Common Units (C)(O) 4,239 21 27 Total Common Equity/Equivalents $ 14,094 $ 1,751 Total Non-Control/Non-Affiliate Investments $ 429,305 $ 496,875 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 79 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2023 (DOLLAR AMOUNTS IN THOUSANDS) Company and Investment (A)(B)(D)(E) Principal/Shares/ Units (F)(H) Cost Fair Value AFFILIATE INVESTMENTS (M) – 58.2 % Secured First Lien Debt – 35.8 % Diversified/Conglomerate Manufacturing – 1.0 % Edge Adhesives Holdings, Inc. (K) – Term Debt (L+ 5.5 %, 10.4 % Cash, Due 8/2024) (G)(J) $ 9,210 $ 9,210 $ 4,255 Diversified/Conglomerate Services – 17.7 % ImageWorks Display and Marketing Group, Inc. – Term Debt (L+ 11.0 %, 15.9 % Cash, Due 11/2025) (J) 22,000 22,000 22,000 J.R. Hobbs Co. - Atlanta, LLC – Line of Credit, $ 0 available (L+ 6.0 %, 10.9 %, Cash, Due 6/2025) (G)(J) 5,000 5,000 2,744 J.R. Hobbs Co. - Atlanta, LLC - Term Debt (L+ 6.0 %, 10.9 % Cash, Due 6/2025) (G)(J) 16,500 16,500 9,054 J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+ 10.3 %, 15.1 % Cash, Due 6/2025) (G)(J) 26,000 26,000 14,268 J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+ 6.0 %, 10.9 % Cash, Due 6/2025) (G)(J) 2,438 2,438 1,338 The Maids International, LLC – Term Debt (L+ 10.5 %, 15.4 % Cash, Due 3/2025) (J) 28,560 28,560 28,560 100,498 77,964 Home and Office Furnishings, Housewares, and Durable Consumer Products – 9.2 % Old World Christmas, Inc. – Term Debt (L+ 9.5 %, 14.4 % Cash, Due 12/2025) (J) 40,500 40,500 40,500 Mining, Steel, Iron and Non-Precious Metals Total – 4.1 % Utah Pacific Bridge & Steel, Ltd. – Term Debt (L+ 10.0 %, 14.9 % Cash, Due 7/2026) (J) 18,250 18,250 18,250 Telecommunications – 3.8 % B+T Group Acquisition, Inc. (K) – Line of Credit, $ 0 available (L+ 11.0 %, 15.9 % Cash, Due 12/2024) (J) 2,800 2,800 2,800 B+T Group Acquisition, Inc. (K) – Term Debt (L+11.0%, 15.9 % Cash, Due 12/2024) (J) 14,000 14,000 14,000 16,800 16,800 Total Secured First Lien Debt $ 185,258 $ 157,769 Secured Second Lien Debt – 5.7 % Chemicals, Plastics, and Rubber – 5.7 % PSI Molded Plastics, Inc. – Term Debt (L+ 5.5 %, 10.4 % Cash, Due 1/2024) (J) $ 26,618 $ 26,618 $ 24,892 Total Secured Second Lien Debt $ 26,618 $ 24,892 Preferred Equity – 13.2 % Chemicals, Plastics, and Rubber – 0.0 % PSI Molded Plastics, Inc. – Preferred Stock (C)(J) 158,598 $ 19,730 $ — Diversified/Conglomerate Manufacturing – 0.0 % Edge Adhesives Holdings, Inc. (K) – Preferred Stock (C)(J) 8,199 8,199 — Diversified/Conglomerate Services – 3.2 % ImageWorks Display and Marketing Group, Inc. – Preferred Stock (C)(J) 67,490 6,749 10,926 J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock (C)(J) 10,920 10,920 — The Maids International, LLC – Preferred Stock (C)(J) 6,640 6,640 3,200 24,309 14,126 Home and Office Furnishings, Housewares, and Durable Consumer Products – 7.7 % Old World Christmas, Inc. – Preferred Stock (C)(J) 6,180 — 33,990 Mining, Steel, Iron and Non-Precious Metals – 1.8 % Utah Pacific Bridge & Steel, Ltd. – Preferred Stock (C)(J) 6,000 6,000 7,748 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 80 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2023 (DOLLAR AMOUNTS IN THOUSANDS) Company and Investment (A)(B)(D)(E) Principal/Shares/ Units (F)(H) Cost Fair Value Telecommunications – 0.5 % B+T Group Acquisition, Inc. (K) – Preferred Stock (C)(J) 14,304 4,722 2,187 Total Preferred Equity $ 62,960 $ 58,051 Common Equity/Equivalents – 3.5 % Diversified/Conglomerate Services – 3.5 % Nth Degree Investment Group, LLC – Common Stock (C)(J) 14,360,000 $ 1,219 $ 15,243 Telecommunications – 0.0 % B+T Group Acquisition, Inc. (K) – Common Stock Warrants (C)(J) 3.5 % — — Total Common Equity/Equivalents $ 1,219 $ 15,243 Total Affiliate Investments $ 276,055 $ 255,955 CONTROL INVESTMENTS (N) – 0.2 % Secured First Lien Debt – 0.0 % Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0 % The Mountain Corporation – Line of Credit, $ 150 available (L+ 5.0 %, 9.9 % Cash, Due 5/2023) (G)(J) 4,550 $ 4,550 $ — Total Secured First Lien Debt 4,550 — Secured Second Lien Debt – 0.0 % Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0 % The Mountain Corporation – Term Debt (L+ 4.0 %, 8.9 % Cash, Due 4/2024) (G)(J) 3,200 $ 3,200 $ — Total Secured Second Lien Debt 3,200 — Preferred Equity – 0.0 % Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0 % The Mountain Corporation – Preferred Stock (C)(J) 6,899 $ 6,899 $ — Total Preferred Equity 6,899 — Common Equity/Equivalents – 0.2 % Leisure, Amusement, Motion Pictures, and Entertainment – 0.2 % Gladstone SOG Investments, Inc. - Common Stock (C)(J) 100 $ 620 $ 713 Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0 % The Mountain Corporation – Common Stock (C)(J) 751 1 — Total Common Equity/Equivalents $ 621 $ 713 Total Control Investments $ 15,270 $ 713 TOTAL INVESTMENTS – 171.4 % (P) $ 720,630 $ 753,543 (A) Certain of the securities listed are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, totaling $ 639.5 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 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 March 31, 2023, 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. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 81 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2023 (DOLLAR AMOUNTS IN THOUSANDS) (B) Unless indicated otherwise, all cash interest rates are indexed to 30-day London Interbank Offered Rate ("LIBOR" or "L"), which was 4.9 % as of March 31, 2023. 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, 2023. (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. (G) Debt security is on non-accrual status. (H) 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. (I) 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. (J) 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. (K) 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. (L) 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. (M) 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. (N) 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. (O) 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. (P) Cumulative gross unrealized appreciation for federal income tax purposes is $ 150.4 million; cumulative gross unrealized depreciation for federal income tax purposes is $ 119.3 million. Cumulative net unrealized appreciation is $ 31.1 million, based on a tax cost of $ 722.4 million. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 82 Table of Contents 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 Luxury Villas, Inc. – Line of Credit, $ 2,000 available (L+ 8.0 %, 10.0 % Cash, Due 6/2023) (K) — — — Nocturne Luxury Villas, 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)(K) 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 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 83 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued) 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 Luxury Villas, 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) — 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 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 84 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued) MARCH 31, 2022 (DOLLAR AMOUNTS IN THOUSANDS) Company and Investment (A)(B)(D)(E) Principal/Shares/ Units (F)(I) Cost Fair Value 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 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 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 85 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued) MARCH 31, 2022 (DOLLAR AMOUNTS IN THOUSANDS) Company and Investment (A)(B)(D)(E) Principal/Shares/ Units (F)(I) Cost Fair Value 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 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 FASB 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. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 86 Table of Contents GLADSTONE INVESTMENT CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued) MARCH 31, 2022 (DOLLAR AMOUNTS IN THOUSANDS) (I) Represents the principal balance for debt investments and the number of shares/units held for equity investments. Warrants are represented as a percentage of ownership, as applicable. (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 11— 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. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 87 Table of Contents GLADSTONE INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA AND AS OTHERWISE INDICATED) 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 March 31, 2023, our investment portfolio was comprised of 77.1 % in debt investments and 22.9 % 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 Basis of Presentation The Consolidated Financial Statements and these accompanying notes are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and conform to the applicable requirements of Regulation S-X. Management believes it has made all necessary adjustments so that our accompanying Consolidated Financial Statements are presented fairly and that all such adjustments are of a normal recurring nature. Our accompanying Consolidated Financial Statements include our accounts and the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Consolidation In accordance with Article 6 of Regulation S-X, we do not consolidate portfolio company investments. Under the investment company rules and regulations pursuant to the American Institute of Certified Public Accountants (“AICPA”) Audit and Accounting Guide for Investment Companies, codified in ASC 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries. 88 Table of Contents 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. Classification of Investments In accordance with the provisions of the 1940 Act applicable to BDCs, we classify portfolio investments on our accompanying Consolidated Statements of Assets and Liabilities , Consolidated Statements of Operations , and Consolidated Schedules of Investments into the following categories: • Non-Control/Non-Affiliate Investments — Non-Control/Non-Affiliate investments are those that are neither control nor affiliate investments and in which we typically own less than 5.0 % of the issued and outstanding voting securities; • Affiliate Investments — Affiliate investments 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; and • Control Investments — Control investments 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. 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 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 (“Valuation Designee”) under the 1940 Act. In accordance with the 1940 Act, our Board of Directors has the ultimate responsibility for reviewing the good faith fair value determination 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 on the Valuation Designee's determinations to the entire Board of Directors so that the full Board of Directors may review the Valuation Designee's determined fair values of such investments in accordance with the Policy. 89 Table of Contents 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 the Valuation Committee reviews whether the Valuation Team’s determined fair value is reasonable in light of the Policy and other relevant facts and circumstances. 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 determination to our Valuation Committee as to the fair value. Our Valuation Committee reviews the determined fair value and whether it is reasonable in light of the Policy and other relevant facts and circumstances. 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, 90 Table of Contents 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. Realized Gain or Loss and Unrealized Appreciation or Depreciation of Portfolio Investments Gains or losses on the sale of investments are calculated by using the specific identification method. A realized gain or loss is recognized on the trade date, typically when an investment is disposed of, and is computed as the difference between the cost basis of the investment on the disposition date and the net proceeds received from such disposition. Unrealized appreciation or depreciation reflects the difference between the fair value of the investment and the cost basis of such investment. We determine the fair value of each individual investment each reporting period and record changes in fair value as unrealized appreciation or depreciation in our accompanying Consolidated Statement of Operations . 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 91 Table of Contents 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 March 31, 2023, our loans to Edge Adhesives Holdings, Inc., 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 $ 66.9 million, or 12.0 % of the cost basis of all debt investments in our portfolio, and an aggregate fair value of $ 31.7 million, or 6.2 % 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. Thus, the actual collection of PIK income may be deferred until the time of debt principal repayment. As of March 31, 2023 and 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. Cash and Cash Equivalents We consider all short-term, highly-liquid investments that are both readily convertible to cash and have a maturity of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. We place our cash with financial institutions, and at times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit. We seek to mitigate this concentration of credit risk by depositing funds with major financial institutions. Restricted Cash and Cash Equivalents Restricted cash and cash equivalents are generally cash and cash equivalents held in escrow received as part of an investment exit. Restricted cash and cash equivalents are carried at cost, which approximates fair value. Deferred Financing and Offering Costs Deferred financing and offering costs consist of costs incurred to obtain financing, including lender fees, underwriting discounts and commissions, and legal fees. Certain costs associated with our revolving line of credit are deferred and amortized using the straight-line method, which approximates the effective interest method, over the term of the revolving line of credit. Costs associated with the issuance of our notes payable and mandatorily redeemable preferred stock are presented as discounts to the liquidation value of the notes payable and mandatorily redeemable preferred stock and are amortized using the straight-line method, which approximates the effective interest method, over the term of the notes payable and respective series of preferred stock. Refer to Note 5 — Borrowings and Note 6 — Mandatorily Redeemable Preferred Stock for further discussion. 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 from time to time (the "Credit Facility"). 92 Table of Contents 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. Federal Income Taxes We intend to continue to maintain our qualification as a RIC under subchapter M of the Code for federal income tax purposes. As a RIC, we generally are not subject to federal income tax on the portion of our taxable income and gains distributed to our stockholders. To maintain our qualification as a RIC, we must maintain our status as a BDC and meet certain source-of-income and asset diversification requirements. In addition, to qualify to be taxed as a RIC, we must generally distribute to stockholders, for each taxable year, at least 90% of our taxable ordinary income plus the excess of our net short-term capital gains over net long-term capital losses (“Investment Company Taxable Income”). Our policy generally is to make distributions to our stockholders in an amount up to 100% of our Investment Company Taxable Income. We intend to continue to make sufficient distributions to qualify as a RIC and to generally limit taxable income, although we may retain some or all of our net long-term capital gains and pay income taxes on such gains. Refer to Note 10 — Federal and State Income Taxes for additional information regarding our RIC requirements. FASB ASC 740, Income Taxes (“ASC 740”), requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authorities. Tax positions not deemed to satisfy the “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current fiscal year. We have evaluated the implications of ASC 740 for all open tax years and in all major tax jurisdictions and determined that there is no material impact on our accompanying Consolidated Financial Statements . Our federal income tax returns for fiscal years 2022, 2021, and 2020 remain subject to examination by the Internal Revenue Service (“IRS”). We are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized benefits will change materially in the next twelve months. Distributions Distributions to stockholders are recorded on the ex-dividend date. We are required to distribute at least 90% of our Investment Company Taxable Income for each taxable year as a distribution to our stockholders to maintain our ability to be taxed as a RIC under Subchapter M of the Code. It is our policy to generally pay out as a distribution up to 100% of those amounts. The amount to be paid is determined by our Board of Directors and is based upon management’s estimate of Investment Company Taxable Income, net long-term capital gains, as well as amounts to be distributed in accordance with Section 855(a) of the Code. Based on that estimate, our Board of Directors declares monthly distributions, and supplemental distributions, as applicable, each quarter. At fiscal year-end, we may elect to treat a portion of the first distributions paid after year-end as having been paid in the prior year in accordance with Section 855(a) of the Code. We may retain some or all of our net long-term capital gains, if any, and designate them as deemed distributions, or distribute these capital gains to stockholders in cash. If we elect to retain net long-term capital gains and deem them distributed, each U.S. common stockholder will be treated as if they received a distribution of their pro-rata share of the retained net long-term capital gain and the U.S. federal income tax paid. As a result, each common stockholder will (i) be required to report their pro-rata share of the retained gain on their tax return as long-term capital gain, (ii) receive a refundable tax credit for their pro-rata share of federal income tax paid by us on the retained gain, and (iii) increase the tax basis of their shares of common stock by an amount equal to the deemed distribution less the tax credit. Refer to Note 9 — Distributions to Common Stockholders for further information. Our common stockholders who hold their shares through our transfer agent, Computershare, Inc. (“Computershare”), have the option to participate in a dividend reinvestment plan offered by Computershare, as the plan agent. This is an “opt in” dividend reinvestment plan, meaning that common stockholders may elect to have their cash distributions automatically reinvested in additional shares of our common stock. Common stockholders who do not so elect will receive their distributions in cash. Any distributions reinvested under the plan will be taxable to a common stockholder to the same extent, and with the same character, as if the common stockholder had received the distribution in cash. The common stockholder will have an adjusted basis in the additional common shares purchased through the plan equal to the dollar amount that would have been received if the U.S. stockholder had received the dividend or distribution in cash. The additional common shares will have a new holding period commencing on the day following the date on which the shares are credited to the common stockholder’s account. Computershare purchases shares in the open market in connection with the obligations under the plan. 93 Table of Contents 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 early adoption of ASU 2022-03 did not have a material impact on our financial position, results of operations or cash flows. In August 2021, the FASB issued Accounting Standards Update 2021-06, “Presentation of Financial Statements (Topic 205): Financial Services – Depository and Lending (Topic 924), and Financial Services – Investment Companies (Topic 946)” (“ASU 2021-06”), which modifies the disclosure requirements for acquired and disposed businesses. ASU 2021-06 was effective upon issuance. Our adoption of ASU 2021-06 did not have a material impact on our financial position, results of operations or cash flows. NOTE 3. INVESTMENTS Fair Value In accordance with ASC 820, we determine the fair value of our investments to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date. • Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical financial instruments in active markets; • Level 2 — inputs to the valuation methodology include quoted prices for similar financial instruments in active or inactive markets, and inputs that are observable for the financial instrument, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists, or instances where prices vary substantially over time or among brokered market makers; and • Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are those inputs that reflect assumptions that market participants would use when pricing the financial instrument and can include the Valuation Team’s assumptions based upon the best available information. When a determination is made to classify our investments within Level 3 of the valuation hierarchy, such determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable, or Level 3, inputs, observable inputs (or components that are actively quoted and can be validated to external sources). The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. As of March 31, 2023 and 2022, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Funko Acquisition Holdings, LLC (“Funko”), which was valued using Level 2 inputs. We transfer investments in and out of Level 1, 2 and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. There were no transfers in or out of Level 1, 2 and 3 during the years ended March 31, 2023 and 2022, respectively. 94 Table of Contents As of March 31, 2023 and 2022, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy: Fair Value Measurements Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) As of March 31, 2023: Secured first lien debt $ 437,517 $ — $ — $ 437,517 Secured second lien debt 75,734 — — 75,734 Preferred equity 222,585 — — 222,585 Common equity/equivalents 17,707 — 27 (A) 17,680 Total Investments at March 31, 2023 $ 753,543 $ — $ 27 $ 753,516 Fair Value Measurements Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) As of March 31, 2022: Secured first lien debt $ 425,087 $ — $ — $ 425,087 Secured second lien debt 67,958 — — 67,958 Preferred equity 217,599 — — 217,599 Common equity/equivalents 3,752 — 74 (A) 3,678 Total Investments at March 31, 2022 $ 714,396 $ — $ 74 $ 714,322 (A) Fair value was determined based on the closing market price of shares of Funko, Inc. (our units in Funko can be converted into common shares of Funko, Inc.) at the reporting date less a discount for lack of marketability, as our investment was subject to certain restrictions. The following table presents our investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy, and carried at fair value as of March 31, 2023 and 2022, by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type: 95 Table of Contents Total Recurring Fair Value Measurements Reported in Consolidated Statements of Assets and Liabilities Valued Using Level 3 Inputs March 31, 2023 2022 Non-Control/Non-Affiliate Investments Secured first lien debt $ 279,748 $ 233,673 Secured second lien debt 50,842 66,917 Preferred equity 164,534 139,927 Common equity/equivalents (A) 1,724 1,533 Total Non-Control/Non-Affiliate Investments 496,848 442,050 Affiliate Investments Secured first lien debt 157,769 191,414 Secured second lien debt 24,892 1,041 Preferred equity 58,051 77,672 Common equity/equivalents 15,243 1,432 Total Affiliate Investments 255,955 271,559 Control Investments Secured first lien debt — — Secured second lien debt — — Preferred equity — — Common equity/equivalents 713 713 Total Control Investments 713 713 Total investments at fair value using Level 3 inputs $ 753,516 $ 714,322 (A) Excludes our investment in Funko with a fair value of $ 27 thousand and $ 74 thousand as of March 31, 2023 and 2022, respectively, which was valued using Level 2 inputs. In accordance with ASC 820, the following table provides quantitative information about our investments valued using Level 3 fair value measurements as of March 31, 2023 and 2022. The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements. The weighted-average calculations in the table below are based on the principal balances for all debt-related calculations and on the cost basis for all equity-related calculations for the particular input. 96 Table of Contents Quantitative Information about Level 3 Fair Value Measurements Fair Value as of Valuation Technique/ Methodology Unobservable Input Range / Weighted-Average as of March 31, 2023 March 31, 2022 March 31, 2023 March 31, 2022 Secured first lien debt $ 432,126 $ 411,023 TEV EBITDA multiple 4.4 x – 7.7 x / 6.4 x 3.4 x – 9.3 x / 7.0 x EBITDA $ 4,251 – $ 19,083 / $ 10,764 $ 3,990 – $ 13,707 / $ 8,221 Revenue multiple 0.3 x – 0.6 x / 0.3 x 0.7 x – 0.7 x / 0.7 x Revenue $ 15,483 – $ 109,615 / $ 94,957 $ 14,072 – $ 14,072 / $ 14,072 5,391 14,064 Yield Analysis Discount Rate 19.4 % – 19.9 % / 19.7 % 11.3 % – 15.2 % / 14.6 % Secured second lien debt 62,750 39,637 TEV EBITDA multiple 5.4 x – 6.6 x / 6.2 x 5.6 x – 6.8 x / 6.0 x EBITDA $ 4,112 – $ 6,379 / $ 5,501 $ 3,953 – $ 5,488 / $ 4,959 Revenue multiple N/A 0.7 x – 0.7 x / 0.7 x Revenue N/A $ 14,072 – $ 14,072 / $ 14,072 12,984 28,321 Yield Analysis Discount Rate 14.0 % – 14.0 % / 14.0 % 10.0 % – 12.2 % / 11.6 % Preferred equity 222,585 217,599 TEV EBITDA multiple 4.4 x – 7.7 x / 5.9 x 3.4 x – 9.3 x / 6.8 x EBITDA $ 4,251 – $ 19,083 / $ 9,486 $ 1,210 – $ 13,707 / $ 6,926 Revenue multiple 0.3 x – 0.6 x / 0.4 x 0.7 x – 0.7 x / 0.7 x Revenue $ 15,483 – $ 109,615 / $ 69,247 $ 14,072 – $ 14,072 / $ 14,072 Common equity/equivalents (A) 17,680 3,678 TEV EBITDA multiple 4.7 x – 7.2 x / 6.4 x 4.8 x – 8.4 x / 5.8 x EBITDA $ 1,105 – $ 30,833 / $ 6,273 $ 829 – $ 13,707 / $ 5,709 Revenue multiple N/A 0.7 x – 0.7 x / 0.7 x Revenue N/A $ 14,072 – $ 14,072 / $ 14,072 Total $ 753,516 $ 714,322 (A) Fair value as of both March 31, 2023 and 2022 excludes our investment in Funko with a fair value of $ 27 thousand and $ 74 thousand, respectively, which was valued using Level 2 inputs. 97 Table of Contents Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in discount rates, EBITDA, or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of our investments. Generally, an increase/(decrease) in discount rates or a (decrease)/increase in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a (decrease)/increase in the fair value of certain of our investments. Changes in Level 3 Fair Value Measurements of Investments The following tables provide our portfolio’s changes in fair value, broken out by security type, during the years ended March 31, 2023 and 2022 for all investments for which the Adviser determines fair value using unobservable (Level 3) inputs. Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Secured First Lien Debt Secured Second Lien Debt Preferred Equity Common Equity/ Equivalents Total Year ended March 31, 2023: Fair value as of March 31, 2022 $ 425,087 $ 67,958 $ 217,599 $ 3,678 $ 714,322 Total gain (loss): Net realized gain (loss) (A) — ( 10,000 ) 20,778 — 10,778 Net unrealized appreciation (depreciation) (B) ( 29,552 ) ( 5,235 ) 11,216 13,622 ( 9,949 ) Reversal of previously recorded (appreciation) depreciation upon realization (B) — 10,001 ( 12,250 ) — ( 2,249 ) New investments, repayments and settlements (C) : Issuances / originations 107,200 5,188 21,000 380 133,768 Settlements / repayments ( 50,800 ) ( 6,596 ) — — ( 57,396 ) Sales (D) — — ( 35,758 ) — ( 35,758 ) Transfers (E) ( 14,418 ) 14,418 — — — Fair value as of March 31, 2023 $ 437,517 $ 75,734 $ 222,585 $ 17,680 $ 753,516 Secured First Lien Debt Secured Second Lien Debt Preferred Equity Common Equity/ Equivalents Total Year ended March 31, 2022: Fair value as of March 31, 2021 $ 368,688 $ 102,897 $ 159,478 $ 2,671 $ 633,734 Total gain (loss): Net realized gain (loss) (A) ( 10,000 ) — 23,725 — 13,725 Net unrealized appreciation (depreciation) (B) 756 2,956 111,405 ( 15,027 ) 100,090 Reversal of previously recorded (appreciation) depreciation upon realization (B) 860 — ( 26,053 ) — ( 25,193 ) New investments, repayments and settlements (C) : Issuances / originations 68,638 9,648 14,472 — 92,758 Settlements / repayments ( 48,898 ) ( 2,500 ) — — ( 51,398 ) Sales — — ( 49,394 ) — ( 49,394 ) Transfers (E) 45,043 ( 45,043 ) ( 16,034 ) 16,034 — Fair value as of March 31, 2022 $ 425,087 $ 67,958 $ 217,599 $ 3,678 $ 714,322 (A) Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective years ended March 31, 2023 and 2022. (B) Included in net unrealized appreciation (depreciation) of investments on our accompanying Consolidated Statements of Operations for the respective years ended March 31, 2023 and 2022. 98 Table of Contents (C) Includes increases in the cost basis of investments resulting from new portfolio investments, the amortization of discounts, and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs, and other cost-basis adjustments. (D) Includes $ 13.4 million of proceeds from the recapitalization of Old World Christmas, Inc. ("Old World") and $ 12.3 million of proceeds from the recapitalization of Horizon Facilities Services, Inc ("Horizon"). (E) 2023 : Transfers include (1) secured second lien debt of Ginsey with a total cost basis and fair value of $ 12.2 million, which was converted into secured first lien debt in August 2022 and (2) secured first lien debt of PSI Molded Plastics, Inc. with a total cost basis and fair value of $ 26.6 million, which was converted into secured second lien debt in September 2022. 2022 : Transfers represent (1) secured second lien debt of J.R. Hobbs with a total cost basis and fair value of $ 52.5 million and $$ 52.4 million, respectively, which was converted into secured first lien debt in June 2021, (2) secured first lien debt of D.P.M.S., Inc. ("Danco") with a total cost basis and fair value of $ 12.3 million and $ 7.3 million, respectively, which was converted into secured second lien debt of Galaxy Technologies Holdings, Inc. (“Galaxy Technologies Holdings”) in September 2021, (3) preferred equity of Galaxy Technologies, Inc. ("Galaxy") with a total cost basis and fair value of $ 11.5 million and $ 16.0 million, respectively, which was converted into common equity of Galaxy Technologies Holdings in September 2021 and (4) preferred equity of SOG Specialty Knives & Tools, LLC with a total cost and fair value of $ 0.6 million and $ 0.0 million , respectively, which was converted into common equity of Gladstone SOG Investments, Inc. in December 2021. Investment Activity During the fiscal year ended March 31, 2023, the following significant transactions occurred: • In May 2022, we invested an additional $ 6.4 million in the form of secured first lien debt in Nocturne Luxury Villas, Inc. ("Nocturne") to fund an add-on acquisition. • In June 2022, we exited our investment in Bassett Creek Services, Inc. ("Bassett Creek"), which resulted in success fee income of $ 3.0 million and a realized gain on preferred equity of $ 4.7 million. In connection with the sale, we received net cash proceeds of $ 57.6 million, including the repayment of our debt investment of $ 48.0 million at par. • In June 2022, we invested $ 21.0 million in a new portfolio company, Dema/Mai Holdings, Inc. (“Dema/Mai”), in the form of preferred equity to acquire Mai Mechanical, LLC, a leading provider of plumbing and mechanical services focused on multi-family residential construction headquartered in Denver, Colorado, from J.R. Hobbs, an existing portfolio company. In July 2022, we invested an additional $ 39.1 million in the form of secured first lien debt in Dema/Mai to fund the acquisition of Dema Plumbing, a plumbing and mechanical systems installation and service provider to single-family residential homebuilders. • In July 2022, we recapitalized our investment in Horizon and invested an additional $ 30.0 million in the form of secured first lien debt. In connection with this investment, we received equity proceeds of $ 12.3 million, which were recognized as a $ 10.1 million return of preferred equity cost basis and a realized gain of $ 2.2 million, as well as dividend income of $ 3.1 million and success fee income of $ 1.7 million. • In August 2022, in conjunction with a refinancing at Ginsey, our $ 13.3 million secured second lien debt investment was reduced to $ 12.2 million and converted to secured first lien debt. The reduction in our cost basis was the result of a $ 5.1 million payment made by Ginsey to extinguish our secured borrowing liability, which was partially offset by an additional investment in Ginsey of $ 4.0 million. Refer to Note 5 - Borrowing s for discussion of the secured borrowing liability. • In October 2022, we invested an additional $ 8.4 million in the form of secured first lien debt in Nocturne to fund an add-on acquisition. • In November 2022, our $ 1.5 million secured second lien debt investment in Country Club Enterprises, LLC ("CCE") was repaid at par. In connection with the repayment, we received success fee income of $ 1.1 million and our $ 1.0 million guaranty was released. Refer to Note 11 - Commitments and Contingencies for discussion of the guaranty. • In December 2022, we recapitalized our investment in Old World and invested an additional $ 15.5 million in the form of secured first lien debt. In connection with this investment, we received proceeds of $ 17.9 million, of which $ 13.4 million was recognized as a realized gain and $ 4.5 million was recognized as dividend income. 99 Table of Contents • In December 2022, we replaced our previously outstanding secured second lien term loan and secured second lien delayed draw term loan to The Mountain with a total aggregate cost basis of $ 13.2 million with a new $ 3.2 million secured second lien term loan, which resulted in a realized loss of $ 10.0 million. • In February 2023, we replaced our two previously outstanding secured first lien revolving lines of credit to The Mountain with an aggregate cost basis of $ 4.3 million with a new secured first lien revolving line of credit with a $ 4.7 million commitment. Investment Conc entrations As of March 31, 2023, our investment portfolio consisted of investments in 25 portfolio companies located in 19 states across 14 different industries with an aggregate fair value of $ 753.5 million. Our investments in Old World, Horizon, Dema/Mai, Nocturne, and Brunswick Bowling Products, Inc., represent our five largest portfolio investments at fair value, and collectively comprised $ 322.3 million, or 42.8 %, of our total investment portfolio at fair value as of March 31, 2023. The following table summarizes our investments by security type as of March 31, 2023 and 2022: March 31, 2023 March 31, 2022 Cost Fair Value Cost Fair Value Secured first lien debt $ 471,439 65.4 % $ 437,517 58.1 % $ 429,457 64.2 % $ 425,087 59.5 % Secured second lien debt 84,158 11.7 % 75,734 10.1 % 81,147 12.1 % 67,958 9.5 % Total debt 555,597 77.1 % 513,251 68.2 % 510,604 76.3 % 493,045 69.0 % Preferred equity 149,099 20.7 % 222,585 29.5 % 143,079 21.4 % 217,599 30.5 % Common equity/equivalents 15,934 2.2 % 17,707 2.3 % 15,565 2.3 % 3,752 0.5 % Total equity/equivalents 165,033 22.9 % 240,292 31.8 % 158,644 23.7 % 221,351 31.0 % Total investments $ 720,630 100.0 % $ 753,543 100.0 % $ 669,248 100.0 % $ 714,396 100.0 % Investments at fair value consisted of the following industry classifications as of March 31, 2023 and 2022: March 31, 2023 March 31, 2022 Fair Value Percentage of Total Investments Fair Value Percentage of Total Investments Diversified/Conglomerate Services $ 268,954 35.7 % $ 307,403 43.0 % Home and Office Furnishings, Housewares, and Durable Consumer Products 143,685 19.1 % 125,440 17.6 % Buildings and Real Estate 60,571 8.0 % — — % Hotels, Motels, Inns, and Gaming 58,713 7.8 % 37,923 5.3 % Leisure, Amusement, Motion Pictures, and Entertainment 47,616 6.3 % 46,514 6.5 % Healthcare, Education, and Childcare 37,445 5.0 % 39,252 5.5 % Mining, Steel, Iron and Non-Precious Metals 25,998 3.5 % 24,250 3.4 % Chemicals, Plastics, and Rubber 24,891 3.3 % 26,618 3.7 % Aerospace and Defense 22,215 2.8 % 25,296 3.5 % Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) 20,088 2.7 % 13,823 1.9 % Telecommunications 18,987 2.5 % 32,467 4.6 % Cargo Transport 14,707 2.0 % 14,533 2.0 % Diversified/Conglomerate Manufacturing 9,646 1.3 % 14,064 2.0 % Other < 2.0% 27 0.0 % 6,813 1.0 % Total investments $ 753,543 100.0 % $ 714,396 100.0 % 100 Table of Contents Investments at fair value were included in the following geographic regions of the U.S. as of March 31, 2023 and 2022: March 31, 2023 March 31, 2022 Location Fair Value Percentage of Total Investments Fair Value Percentage of Total Investments Northeast $ 266,612 35.4 % $ 194,100 27.2 % West 197,989 26.3 % 158,607 22.2 % South 171,056 22.7 % 188,978 26.4 % Midwest 117,886 15.6 % 172,711 24.2 % Total investments $ 753,543 100.0 % $ 714,396 100 % The geographic region indicates the location of the headquarters for our portfolio companies. A portfolio company may have additional business locations in other geographic regions. Investment Principal Repayments The following table summarizes the contractual principal repayment and maturity of our investment portfolio for the next five fiscal years and thereafter, assuming no voluntary prepayments, as of March 31, 2023: Amount For the fiscal years ending March 31: 2024 $ 81,218 2025 89,614 2026 202,419 2027 144,096 2028 38,250 Thereafter — Total contractual repayments $ 555,597 Investments in equity securities 165,033 Total cost basis of investments held as of March 31, 2023: $ 720,630 Receivables from Portfolio Companies Receivables from portfolio companies represent non-recurring costs that we incurred on behalf of portfolio companies. Such receivables, net of any allowance for uncollectible receivables, are included in Other assets, net on our accompanying Consolidated Statements of Assets and Liabilities . We generally maintain an allowance for uncollectible receivables from portfolio companies when the receivable balance becomes 90 days or more past due or if it is determined, based upon management’s judgment, that the portfolio company is unable to pay its obligations. We write-off accounts receivable when we have exhausted collection efforts and have deemed the receivables uncollectible. As of March 31, 2023 and 2022, we had gross receivables from portfolio companies of $ 2.2 million and $ 1.7 million, respectively. As of March 31, 2023 and 2022, the allowance for uncollectible receivables was $ 1.6 million and $ 1.3 million, respectively. NOTE 4. RELATED PARTY TRANSACTIONS Transactions with the Adviser We pay the Adviser certain fees as compensation for its services under the Advisory Agreement, consisting of a base management fee and an incentive fee, and a loan servicing fee for the Adviser’s role as servicer pursuant to the Credit Facility, all as described below. On July 12, 2022, our Board of Directors, including a majority of the directors who are not parties to the Advisory Agreement or interested persons of either party, approved the annual renewal of the Advisory Agreement through August 31, 2023. Two of our executive officers, David Gladstone (our chairman and chief executive officer) and Terry Lee Brubaker (our chief operating officer) serve as directors and executive officers of the Adviser, which is 100 % indirectly owned and controlled by Mr. Gladstone. David Dullum (our president) is also the executive vice president of private equity (buyouts) of the Adviser. Michael LiCalsi, our general counsel and secretary (who also serves as the Administrator’s president, 101 Table of Contents general counsel and secretary), is also the executive vice president of administration, general counsel, and secretary of our Adviser. The following table summarizes the base management fees, loan servicing fees, incentive fees, and associated non-contractual, unconditional, and irrevocable credits reflected in our accompanying Consolidated Statements of Operations : Year Ended March 31, 2023 2022 2021 Average total assets subject to base management fee (A) $ 739,900 $ 705,650 $ 605,750 Multiplied by annual base management fee of 2.0 % 2.0 % 2.0 % 2.0 % Base management fee (B) 14,798 14,113 12,115 Credits to fees from Adviser - other (B) ( 3,811 ) ( 6,497 ) ( 2,949 ) Net base management fee $ 10,987 $ 7,616 $ 9,166 Loan servicing fee (B) $ 7,880 $ 7,178 $ 7,082 Credits to base management fee - loan servicing fee (B) ( 7,880 ) ( 7,178 ) ( 7,082 ) Net loan servicing fee $ — $ — $ — Incentive fee – income-based $ 9,176 $ 8,074 $ 3,746 Incentive fee – capital gains-based (C) ( 296 ) 18,286 5,032 Total incentive fee (B) 8,880 26,360 8,778 Credits to fees from Adviser - other (B) — — — Net total incentive fee $ 8,880 $ 26,360 $ 8,778 (A) Average total assets subject to the base management fee is defined in the Advisory Agreement as total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the applicable quarters within the respective periods and adjusted appropriately for any share issuances or repurchases during the periods. (B) Reflected as a line item on our accompanying Consolidated Statements of Operations . (C) The capital gains-based incentive fees are recorded in accordance with GAAP and do not necessarily reflect amounts contractually due under the terms of the Advisory Agreement. Base Management Fee The base management fee is payable quarterly to the Adviser pursuant to our Advisory Agreement and is assessed at an annual rate of 2.0 %, computed on the basis of the value of our average gross assets at the end of the two most recently completed quarters (inclusive of the current quarter), which are total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the applicable quarters within the respective period and adjusted appropriately for any share issuances or repurchases during the period. Additionally, pursuant to the requirements of the 1940 Act, the Adviser makes available significant managerial assistance to our portfolio companies. The Adviser may also provide other services to our portfolio companies under certain agreements and may receive fees for services other than managerial assistance. Such services may include: (i) assistance obtaining, sourcing or structuring credit facilities, long term loans or additional equity from unaffiliated third parties; (ii) negotiating important contractual financial relationships; (iii) consulting services regarding restructuring of the portfolio company and financial modeling as it relates to raising additional debt and equity capital from unaffiliated third parties; and (iv) taking a primary role in interviewing, vetting, and negotiating employment contracts with candidates in connection with adding and retaining key portfolio company management team members. The Adviser non-contractually, unconditionally, and irrevocably credits 100 % of any fees received for such services against the base management fee that we would otherwise be required to pay to the Adviser; however, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees, totaling $ 0.2 million, $ 0.3 million, and $ 0.2 million for the years ended March 31, 2023, 2022, and 2021, respectively, was retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser, primarily related to the valuation of portfolio companies. 102 Table of Contents Loan Servicing Fee The Adviser also services the loans held by our wholly-owned subsidiary, Business Investment (the borrower under the Credit Facility), in return for which the Adviser receives a 2.0 % annual fee based on the monthly aggregate outstanding balance of loans pledged under the Credit Facility. Since Business Investment is a consolidated subsidiary of ours, coupled with the fact that the total base management fee paid to the Adviser pursuant to the Advisory Agreement cannot exceed 2.0 % of total assets (less any uninvested cash or cash equivalents resulting from borrowings) during any given calendar year, we treat payment of the loan servicing fee pursuant to the Credit Facility as a pre-payment of the base management fee under the Advisory Agreement. Accordingly, these loan servicing fees are 100 % non-contractually, unconditionally, and irrevocably credited back to us by the Adviser. Incentive Fee The incentive fee payable to the Adviser under our Advisory Agreement consists of two parts: an income-based incentive fee and a capital gains-based incentive fee. The income-based incentive fee rewards the Adviser if our quarterly net investment income (before giving effect to any incentive fee) exceeds 1.75 % of our net assets, which we define as total assets less indebtedness and before taking into account any incentive fees payable or contractually due but not payable during the period, at the end of the immediately preceding calendar quarter, adjusted appropriately for any share issuances or repurchases during the period (the “Hurdle Rate”). The income-based incentive fee with respect to our pre-incentive fee net investment income is payable quarterly to the Adviser and is computed as follows: • No incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the Hurdle Rate; • 100.0 % of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Rate but is less than 2.1875 % of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter; and • 20.0 % of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875 % of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter. The second part of the incentive fee is a capital gains-based incentive fee that is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date), and equals 20.0 % of our realized capital gains, less any realized capital losses and unrealized depreciation, calculated as of the end of the preceding calendar year. The capital gains-based incentive fee payable to the Adviser is calculated based on (i) cumulative aggregate realized capital gains since our inception, less (ii) cumulative aggregate realized capital losses since our inception, less (iii) the entire portfolio’s aggregate unrealized capital depreciation, if any, as of the date of the calculation. If this number is positive at the applicable calculation date, then the capital gains-based incentive fee for such year equals 20.0 % of such amount, less the aggregate amount of any capital gains-based incentive fees paid in respect of our portfolio in all prior years. For calculation purposes, cumulative aggregate realized capital gains, if any, equals the sum of the excess between the net sales price of each investment, when sold, and the original cost of such investment since our inception. Cumulative aggregate realized capital losses equals the sum of the deficit between the net sales price of each investment, when sold, and the original cost of such investment since our inception. The entire portfolio’s aggregate unrealized capital depreciation, if any, equals the sum of the deficit between the fair value of each investment security as of the applicable calculation date and the original cost of such investment security. As of and for the years ended March 31, 2023 and 2021, no capital gains-based incentive fees were contractually due and paid to the Adviser. As of and for the year ended March 31, 2022, $ 5.3 million capital gains-based incentive fees were contractually due and paid to the Adviser. In accordance with GAAP, accrual of the capital gains-based incentive fee is determined as if our investments had been liquidated at their fair values as of the end of the reporting period. Therefore, GAAP requires that the capital gains-based incentive fee accrual consider the aggregate unrealized capital appreciation in the calculation, as a capital gains-based incentive fee would be payable if such unrealized capital appreciation were realized. There can be no assurance that any such unrealized capital appreciation will be realized in the future. Accordingly, a GAAP accrual is calculated at the end of the reporting period based on (i) cumulative aggregate realized capital gains since our inception, plus (ii) the entire portfolio’s aggregate unrealized capital appreciation, if any, less (iii) cumulative aggregate realized capital losses since our inception, less (iv) the entire portfolio’s aggregate unrealized capital depreciation, if any. If such amount is positive at the 103 Table of Contents end of a reporting period, a capital gains-based incentive fee equal to 20.0 % of such amount, less the aggregate amount of capital gains-based incentive fees accrued in all prior years, is recorded, regardless of whether such amount is contractually due under the terms of the Advisory Agreement. If such amount is negative, then there is no accrual for such period and prior period accruals are reversed, as appropriate. During the year ended March 31, 2023, we recorded a reversal of capital gains-based incentive fees of $ 0.3 million. During the years ended March 31, 2022 and 2021, we recorded capital gains-based incentive fees of $ 18.3 million and $ 5.0 million, respectively. Transactions with the Administrator We reimburse the Administrator pursuant to the Administration Agreement for our allocable portion of the Administrator’s expenses incurred while performing services to us, which are primarily rent and salaries and benefits expenses of the Administrator’s employees, including, our chief financial officer and treasurer, chief valuation officer, chief compliance officer, and general counsel and secretary, and their respective staffs. Two of our executive officers, David Gladstone (our chairman and chief executive officer) and Terry Lee Brubaker (our chief operating officer) serve as members of the board of managers and executive officers of the Administrator, which is 100 % indirectly owned and controlled by Mr. Gladstone. Another of our officers, Mr. LiCalsi (our general counsel and secretary), serves as the Administrator’s president as well as the executive vice president of administration, general counsel, and secretary for the Adviser. Our allocable portion of the Administrator’s expenses is generally derived by multiplying the Administrator’s total expenses by the approximate percentage of time during the current quarter the Administrator’s employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator. On July 12, 2022, our Board of Directors, including a majority of the directors who are not parties to the Administration Agreement or interested persons of either party, approved the annual renewal of the Administration Agreement through August 31, 2023. Administration fees for the years ended March 31, 2023, 2022, and 2021 were $ 1.8 million, $ 1.8 million, and $ 1.6 million, respectively. Transactions with Gladstone Securities, LLC Gladstone Securities, LLC (“Gladstone Securities”) is a privately held broker dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is 100 % owned and controlled by David Gladstone, our chairman and chief executive officer. Mr. Gladstone also serves on the board of managers of Gladstone Securities. Other Transactions From time to time, Gladstone Securities provides services, such as investment banking and due diligence services, to certain of our portfolio companies, for which it receives a fee. Any such fees paid by portfolio companies to Gladstone Securities do not impact the fees we pay to the Adviser or the non-contractual, unconditional, and irrevocable credits against the base management fee. During the years ended March 31, 2023, 2022, and 2021, the fees received by Gladstone Securities from portfolio companies totaled $ 1.6 million, $ 3.2 million, and $ 0.6 million, respectively. Related Party Fees Due Amounts due to related parties on our accompanying Consolidated Statements of Assets and Liabilities were as follows: As of March 31, 2023 2022 Base management and loan servicing fee due to Adviser, net of credits $ 1,574 $ 1,648 Incentive fee due to Adviser (A) 27,259 27,577 Other due to Adviser 86 63 Total fees due to Adviser $ 28,919 $ 29,288 Fee due to Administrator 716 627 Total related party fees due $ 29,635 $ 29,915 (A) Includes a capital gains-based incentive fee of $ 25.1 million and $ 25.4 million as of March 31, 2023 and 2022, respectively, recorded in accordance with GAAP requirements and which was not contractually due under the terms of the Advisory Agreement. Refer to Note 4 — Related Party Transactions — Transactions with the Adviser — Incentive Fee for additional information, including capital gains-based incentive fee payments made. 104 Table of Contents Net expenses receivable from Gladstone Capital Corporation, one of our affiliated funds, for reimbursement of certain co-investment expenses, totaled $ 27 thousand as of March 31, 2022. There were no co-investment expenses as of March 31, 2023. These amounts are generally settled in the quarter subsequent to being incurred and have been included in Other assets, net on the accompanying Consolidated Statements of Assets and Liabilities as of March 31, 2023 and 2022, respectively. NOTE 5. BORROWINGS Revolving Line of Credit On March 8, 2021, we, through our wholly-owned subsidiary, Business Investment, entered into Amendment No. 6 to the Credit Facility, with KeyBank National Association (“KeyBank”) as administrative agent, lead arranger, managing agent and lender, the Adviser, as servicer, and certain other lenders party thereto. The revolving period was extended to February 29, 2024, and if not renewed or extended by such date, all principal and interest will be due and payable on February 28, 2026 ( two years after the revolving period end date). On August 10, 2020, we, through Business Investment, entered into Amendment No. 5 to the Credit Facility. Among other things, Amendment No. 5 amended the Credit Facility to (i) add London Interbank Offered Rate (“LIBOR”) replacement language; (ii) implement a 0.50 % LIBOR floor; (iii) reduce the facility size from $ 200.0 million to $ 180.0 million, which may be expanded to $ 300.0 million through additional commitments; and (iv) provide certain other changes to existing terms and covenants. Advances under the Credit Facility generally bear interest at 30-day LIBOR, subject to a floor of 0.50 %, plus 2.85 % per annum until February 29, 2024, with the margin then increasing to 3.10 % for the period from February 29, 2024 to February 28, 2025, and increasing further to 3.35 % thereafter. The Credit Facility has an unused commitment fee on the daily unused commitment amount of 0.50 % per annum if the average unused commitment amount for the period is less than or equal to 50% of the total commitment amount, 0.75 % per annum if the average unused commitment amount for the period is greater than 50% but less than or equal to 65% of the total commitment amount, and 1.00 % per annum if the average unused commitment amount for the period is greater than 65% of the total commitment amount. Refer to Note 14 — Subsequent Events for information on Amendment No. 7 to the Credit Facility. The following tables summarize noteworthy information related to the Credit Facility: As of March 31, 2023 2022 Commitment amount $ 180,000 $ 180,000 Borrowings outstanding at cost $ 35,200 $ — Availability (A) $ 144,800 $ 180,000 For the Years Ended March 31 2023 2022 2021 Weighted-average borrowings outstanding $ 16,186 $ 18,051 $ 82,632 Effective interest rate (B) 17.3 % 12.5 % 4.3 % Commitment (unused) fees incurred $ 1,655 $ 1,641 $ 819 (A) Availability is subject to various constraints, characteristics, and applicable advance rates based on collateral quality under the Credit Facility, which equated to an adjusted availability of $ 144.8 million and $ 180.0 million as of March 31, 2023 and 2022, respectively. (B) Excludes the impact of deferred financing costs and includes unused commitment fees. Interest is payable monthly during the term of the Credit Facility. Available borrowings are subject to various constraints and applicable advance rates, which are generally based on the size, characteristics, and quality of the collateral pledged by Business Investment. The Credit Facility also requires that any interest and principal payments on pledged loans be remitted directly by the borrower into a lockbox account with KeyBank. KeyBank is also the trustee of the account and generally remits the collected funds to us once a month. Amounts collected in the lockbox account with KeyBank are presented as Due from administrative agent on the accompanying Consolidated Statements of Assets and Liabilities. 105 Table of Contents Among other things, the Credit Facility contains a performance guaranty that requires us to maintain (i) a minimum net worth of the greater of $ 210.0 million or $ 210.0 million plus 50 % of all equity and subordinated debt raised minus 50 % of any equity or subordinated debt redeemed or retired after November 16, 2016, which equated to $ 289.0 million as of March 31, 2023, (ii) asset coverage with respect to senior securities representing indebtedness of at least 150 % (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act); and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code. As of March 31, 2023, and as defined in the performance guaranty of the Credit Facility, we had a net worth of $ 696.7 million, asset coverage on our senior securities representing indebtedness of 244.7 %, calculated in compliance with the requirements of Sections 18 and 61 of the 1940 Act, and an active status as a BDC and RIC. As of March 31, 2023, we were in compliance with all covenants under the Credit Facility. Fair Value We elected to apply the fair value option of ASC Topic 825, “ Financial Instruments ,” to the Credit Facility, which was consistent with our application of ASC 820 to our investments. Generally, the fair value of the Credit Facility is determined using a yield analysis, which includes a DCF calculation and also takes into account the assumptions the Valuation Team believes market participants would use, including the estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar securities as of the measurement date. At March 31, 2023, the discount rate used to determine the fair value of the Credit Facility was 30-day LIBOR, with a 0.50 % floor, plus 2.94 % per annum, plus an unused commitment fee of 1.0 %. At March 31, 2022, the discount rate used to determine the fair value of the Credit Facility was 30-day LIBOR, with a 0.50 % floor, plus 2.85 % per annum, plus an unused commitment fee of 1.0 %. Generally, an increase or decrease in the discount rate used in the DCF calculation may result in a corresponding decrease or increase, respectively, in the fair value of the Credit Facility. At each of March 31, 2023 and 2022, the Credit Facility was valued using Level 3 inputs and any changes in its fair value are recorded in Net unrealized appreciation (depreciation) of other on our accompanying Consolidated Statements of Operations . The following tables provide relevant information and disclosures about the Credit Facility as of and for the years ended March 31, 2023 and 2022, as required by ASC 820: Level 3 – Borrowings Recurring Fair Value Measurements Reported in Consolidated Statements of Assets and Liabilities Using Significant Unobservable Inputs (Level 3) As of March 31, 2023 2022 Credit Facility $ 35,171 $ — Fair Value Measurements of Borrowings Using Significant Unobservable Inputs (Level 3) Reported in Consolidated Statements of Assets and Liabilities Credit Facility Year ended March 31, 2023: Fair value at March 31, 2022 $ — Borrowings 102,500 Repayments ( 67,300 ) Unrealized depreciation ( 29 ) Fair value at March 31, 2023 $ 35,171 Year ended March 31, 2022: Fair value at March 31, 2021 $ 22,400 Borrowings 111,700 Repayments ( 134,100 ) Fair value at March 31, 2022 $ — The fair value of the collateral under the Credit Facility was $ 639.5 million and $ 537.5 million as of March 31, 2023 and 2022, respectively. 106 Table of Contents Notes Payable 5.00 % Notes due 2026 In March 2021, we completed a public offering of 5.00 % Notes due 2026 with an aggregate principal amount of $ 127.9 million (the “2026 Notes”), which resulted in net proceeds of approximately $ 123.8 million after deducting underwriting discounts, commissions and offering costs borne by us. The 2026 Notes are traded under the ticker symbol “GAINN” on the Nasdaq Global Select Market (“Nasdaq”). The 2026 Notes will mature on May 1, 2026 and may be redeemed in whole or in part at any time or from time to time at the Company's option on or after May 1, 2023. The 2026 Notes bear interest at a rate of 5.00 % per year, which is payable quarterly in arrears. The indenture relating to the 2026 Notes contains certain covenants, including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s asset coverage meets the threshold specified in the 1940 Act after such borrowing, (ii) an inability to declare any dividend or distribution (except a dividend payable in our stock) on a class of our capital stock or to purchase shares of our capital stock unless the Company’s asset coverage meets the threshold specified in the 1940 Act at the time of (and giving effect to) such declaration or purchase, and (iii) if, at any time, we are not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we will provide the holders of the 2026 Notes, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements. The 2026 Notes are recorded at the aggregate principal amount, less underwriting discounts, commissions, and offering costs, on our accompanying Consolidated Statements of Assets and Liabilities . Total underwriting discounts, commissions, and offering costs related to this offering were $ 4.1 million, which have been recorded as discounts to the aggregate principal amount on our accompanying Consolidated Statements of Assets and Liabilities and are being amortized over the period ending May 1, 2026, the maturity date. 4.875 % Notes due 2028 In August 2021, we completed a public offering of 4.875 % Notes due 2028 with an aggregate principal amount of $ 134.6 million (the “2028 Notes”), which resulted in net proceeds of approximately $ 131.3 million after deducting underwriting discounts, commissions and offering costs borne by us. The 2028 Notes are traded under the ticker symbol “GAINZ” on Nasdaq. The 2028 Notes will mature on November 1, 2028 and may be redeemed in whole or in part at any time or from time to time at the Company's option on or after November 1, 2023. The 2028 Notes bear interest at a rate of 4.875 % per year, which is payable quarterly in arrears. The indenture relating to the 2028 Notes contains certain covenants, including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s asset coverage meets the threshold specified in the 1940 Act after such borrowing, (ii) an inability to declare any dividend or distribution (except a dividend payable in our stock) on a class of our capital stock or to purchase shares of our capital stock unless the Company’s asset coverage meets the threshold specified in the 1940 Act at the time of (and giving effect to) such declaration or purchase, and (iii) if, at any time, we are not subject to the reporting requirements of the Exchange Act, we will provide the holders of the 2028 Notes, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements. The 2028 Notes are recorded at the aggregate principal amount, less underwriting discounts, commissions, and offering costs, on our accompanying Consolidated Statements of Assets and Liabilities . Total underwriting discounts, commissions, and offering costs related to this offering were $ 3.3 million, which have been recorded as discounts to the aggregate principal amount on our accompanying Consolidated Statements of Assets and Liabilities and are being amortized over the period ending November 1, 2028, the maturity date. 107 Table of Contents The following tables summarizes our 2026 Notes and 2028 Notes as of March 31, 2023 and 2022: As of March 31, 2023: Description Ticker Symbol Date Issued Maturity Date (A) Interest Rate Notes Outstanding Principal Amount per Note Aggregate Principal Amount 2026 Notes GAINN March 2, 2021 May 1, 2026 5.00 % 5,117,500 $ 25.00 $ 127,938 2028 Notes GAINZ August 18, 2021 November 1, 2028 4.875 % 5,382,000 $ 25.00 134,550 Notes payable, gross (B) 10,499,500 262,488 Less: Unamortized Discounts ( 5,052 ) Notes payable, net (C) $ 257,436 As of March 31, 2022: Description Ticker Symbol Date Issued Maturity Date (A) Interest Rate Notes Outstanding Principal Amount per Note Aggregate Principal Amount 2026 Notes GAINN March 2, 2021 May 1, 2026 5.00 % 5,117,500 $ 25.00 $ 127,938 2028 Notes GAINZ August 18, 2021 November 1, 2028 4.875 % 5,382,000 $ 25.00 134,550 Notes payable, gross (B) 10,499,500 262,488 Less: Unamortized Discounts ( 6,236 ) Notes payable, net (C) $ 256,252 (A) The 2026 Notes can be redeemed at our option at any time on or after May 1, 2023. The 2028 Notes can be redeemed at our option at any time on or after November 1, 2023. (B) As of March 31, 2023 and 2022, asset coverage on our senior securities representing indebtedness, calculated pursuant to Sections 18 and 61 of the 1940 Act, was 244.7 % and 252.9 %, respectively. (C) Reflected as a line item on our accompanying Consolidated Statements of Assets and Liabilities . The fair value based on the last reported closing prices of the 2026 Notes and 2028 Notes as of March 31, 2023 was $ 121.5 million and $ 127.4 million, respectively. The fair value based on the last reported closing prices of the 2026 Notes and 2028 Notes as of March 31, 2022 was $ 128.3 million and $ 134.3 million, respectively. We consider the closing prices of the 2026 Notes and 2028 Notes to be a Level 1 inputs within the ASC 820 hierarchy. Secured Borrowing In August 2012, we entered into a participation agreement with a third-party related to $ 5.0 million of our secured second lien term debt investment in Ginsey and in May 2014, we amended the agreement with the third-party to include an additional $ 0.1 million. ASC Topic 860, “ Transfers and Servicing ” required us to treat the participation as a financing-type transaction. Specifically, the third-party had a senior claim to our remaining investment in the event of default by Ginsey which, in part, resulted in the loan participation bearing a rate of interest lower than the contractual rate established at origination. Therefore, our accompanying Consolidated Statements of Assets and Liabilities as of March 31, 2022 reflect the entire secured second lien term debt investment in Ginsey and a corresponding $ 5.1 million secured borrowing liability. In conjunction with the August 2022 refinancing at Ginsey, the $ 5.1 million secured borrowing liability was extinguished. NOTE 6. MANDATORILY REDEEMABLE PREFERRED STOCK In August 2021, we used a portion of the proceeds from the issuance of our 2028 Notes to voluntarily redeem all outstanding shares of our 6.375 % Series E Cumulative Term Preferred Stock (or “Series E Term Preferred Stock” or “Series E”), which had a liquidation preference of $ 25.00 per share. In connection with the voluntary redemption of our Series E Term Preferred Stock, we incurred a loss on extinguishment of debt of $ 2.0 million, which was recorded in Realized loss on other in our accompanying Consolidated Statements of Operations and which was primarily comprised of unamortized deferred issuance costs at the time of redemption. 108 Table of Contents In March 2021, we used a portion of the proceeds from the issuance of our 2026 Notes to voluntarily redeem all outstanding shares of our 6.25 % Series D Cumulative Term Preferred Stock (or “Series D Term Preferred Stock” or “Series D”), which had a liquidation preference of $ 25.00 per share. In connection with the voluntary redemption of our Series D Term Preferred Stock, we incurred a loss on extinguishment of debt of $ 0.8 million, which was recorded in Realized loss on other in our accompanying Consolidated Statements of Operations and which was primarily comprised of unamortized deferred issuance costs at the time of redemption . The following tables summarize dividends declared by our Board of Directors and paid by us on each of our Series D Term Preferred Stock and Series E Term Preferred Stock during the years ended March 31, 2022 and 2021: For the Year Ended March 31, 2022 : Declaration Date Record Date Payment Date Dividend per Share of Series E Term Preferred Stock (A) April 13, 2021 April 23, 2021 April 30, 2021 $ 0.13281250 April 13, 2021 May 19, 2021 May 28, 2021 0.13281250 April 13, 2021 June 18, 2021 June 30, 2021 0.13281250 July 13, 2021 July 23, 2021 July 30, 2021 0.13281250 July 13, 2021 August 23, 2021 August 31, 2021 0.07968750 (B) Total $ 0.61093750 For the Year Ended March 31, 2021 : Declaration Date Record Date Payment Date Dividend per Share of Series D Term Preferred Stock (C) Dividend per Share of Series E Term Preferred Stock (A) April 14, 2020 April 24, 2020 April 30, 2020 $ 0.13020833 $ 0.13281250 April 14, 2020 May 19, 2020 May 29, 2020 0.13020833 0.13281250 April 14, 2020 June 19, 2020 June 30, 2020 0.13020833 0.13281250 July 14, 2020 July 24, 2020 July 31, 2020 0.13020833 0.13281250 July 14, 2020 August 24, 2020 August 31, 2020 0.13020833 0.13281250 July 14, 2020 September 23, 2020 September 30, 2020 0.13020833 0.13281250 October 13, 2020 October 23, 2020 October 30, 2020 0.13020833 0.13281250 October 13, 2020 November 20, 2020 November 30, 2020 0.13020833 0.13281250 October 13, 2020 December 23, 2020 December 31, 2020 0.13020833 0.13281250 January 12, 2021 January 22, 2021 January 29, 2021 0.13020833 0.13281250 January 12, 2021 February 17, 2021 February 26, 2021 0.13020833 0.13281250 January 12, 2021 March 18, 2021 March 31, 2021 0.00868056 (D) 0.13281250 Total $ 1.44097219 $ 1.59375000 (A) We voluntarily redeemed all outstanding shares of our Series E Term Preferred Stock on August 19, 2021 (B) Represents accrued and unpaid dividends up to, but excluding, the redemption date of August 19, 2021. (C) We voluntarily redeemed all outstanding shares of our Series D Term Preferred Stock on March 3, 2021. (D) Represents accrued and unpaid dividends up to, but excluding, the redemption date of March 3, 2021. The federal income tax characteristics of dividends paid to our preferred stockholders generally constitute ordinary income or capital gains to the extent of our current and accumulated earnings and profits and are reported after the end of the calendar year based on tax information for the full fiscal year. The tax characterization of dividends paid to our preferred stockholders during the calendar year ended December 31, 2021 was 71.3 % from ordinary income and 28.7 % from capital gains. 109 Table of Contents NOTE 7. REGISTRATION STATEMENT AND COMMON EQUITY OFFERINGS Registration Statement On September 3, 2021, we filed a registration statement on Form N-2 (File No. 333-259302), which the SEC declared effective on October 15, 2021. The registration statement permits us to issue, through one or more transactions, up to an aggregate of $ 300.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities, and warrants to purchase common stock, preferred stock, or debt securities, including through concurrent, separate offerings of such securities. As of March 31, 2023, we had the ability to issue up to $ 294.5 million of the securities registered under the registration statement. Common Equity Offerings In August 2022, we entered into equity distribution agreements with Oppenheimer & Co. and Virtu Americas LLC (each a “Sales Agent”), under which we have the ability to issue and sell shares of our common stock, from time to time, through the Sales Agents, up to an aggregate offering price of $ 50.0 million in what is commonly referred to as an “at-the-market” program (“Common Stock ATM Program”). During the year ended March 31, 2023, we sold 386,482 shares of our common stock under the Common Stock ATM Program at a weighted-average gross price of $ 14.21 per share and raised approximately $ 5.5 million of gross proceeds. The weighted-average net price per share, after deducting commissions and offering costs borne by us, was $ 14.01 and resulted in total net proceeds of approximately $ 5.4 million. These sales were above our then current NAV per share. In December 2019, we entered into equity distribution agreements with Wedbush Securities, Inc., Cantor Fitzgerald & Co., and Ladenburg Thalmann & Co., Inc. (each a “2019 Sales Agent”), under which we had the ability to issue and sell shares of our common stock, from time to time, through the 2019 Sales Agents, up to an aggregate offering price of $ 35.0 million in an at-the-market program (the “2019 Common Stock ATM Program”). On August 11, 2021, we terminated the equity distribution agreements with each of the 2019 Sales Agents. We did not sell any shares of our common stock under the 2019 Common Stock ATM Program during the year ended March 31, 2022. During the year ended March 31, 2021, we sold 155,560 shares of our common stock under the 2019 Common Stock ATM Program at a weighted-average gross price of $ 11.39 per share and raised approximately $ 1.8 million of gross proceeds. The weighted-average net price per share, after deducting commissions and offering costs borne by us, was $ 11.17 and resulted in total net proceeds of approximately $ 1.7 million. These sales were above our then current NAV per share. NOTE 8. NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER WEIGHTED-AVERAGE COMMON SHARE The following table sets forth the computation of basic and diluted Net increase in net assets resulting from operations per weighted-average common share for the years ended March 31, 2023, 2022, and 2021: Year Ended March 31, 2023 2022 2021 Numerator: net increase (decrease) in net assets resulting from operations $ 35,547 $ 102,316 $ 42,454 Denominator: basic and diluted weighted-average common shares 33,311,785 33,205,023 33,176,760 Basic and diluted net increase (decrease) in net assets resulting from operations per weighted-average common share $ 1.07 $ 3.08 $ 1.28 110 Table of Contents NOTE 9. DISTRIBUTIONS TO COMMON STOCKHOLDERS To qualify to be taxed as a RIC under Subchapter M of the Code, we must generally distribute to our stockholders, for each taxable year, at least 90% of our Investment Company Taxable Income. The amount to be paid out as distributions to our stockholders is determined by our Board of Directors and is based upon management’s estimate of Investment Company Taxable Income and net long-term capital gains, as well as amounts to be distributed in accordance with Section 855(a) of the Code. Based on that estimate, our Board of Directors declares monthly distributions, and supplemental distributions, as appropriate, to stockholders each quarter and deemed distributions of long-term capital gains annually as of the end of the fiscal year, as applicable. The U.S. federal income tax characteristics of cash distributions paid to our common stockholders generally are reported to stockholders on IRS Form 1099 after the end of each calendar year. Estimates of tax characterization made on a quarterly basis may not be representative of the actual tax characterization of cash distributions for the full year. Estimates made on a quarterly basis are updated as of each interim reporting date. The tax characterization of cash distributions paid to our common stockholders during the calendar year ended December 31, 2022 was 61.2 % from ordinary income and 38.8 % from capital gains. The tax characterization of cash distributions paid to our common stockholders during the calendar year ended December 31, 2021 was 71.3 % from ordinary income and 28.7 % from capital gains . We paid the following cash distributions to our common stockholders for the years ended March 31, 2023, 2022 and 2021. For the Year Ended March 31, 2023 : Declaration Date Record Date Payment Date Distribution per Common Share April 12, 2022 April 22, 2022 April 29, 2022 $ 0.075 April 12, 2022 May 20, 2022 May 31, 2022 0.075 April 12, 2022 June 6, 2022 June 15, 2022 0.120 (A) April 12, 2022 June 22, 2022 June 30, 2022 0.075 July 12, 2022 July 22, 2022 July 29, 2022 0.075 July 12, 2022 August 23, 2022 August 31, 2022 0.075 July 12, 2022 September 22, 2022 September 30, 2022 0.075 October 11, 2022 October 21, 2022 October 31, 2022 0.080 October 11, 2022 November 18, 2022 November 30, 2022 0.080 October 11, 2022 December 6, 2022 December 15, 2022 0.120 (A) October 11, 2022 December 20, 2022 December 30, 2022 0.080 January 10, 2023 January 20, 2023 January 31, 2023 0.080 January 10, 2023 February 17, 2023 February 28, 2023 0.080 January 10, 2023 March 3, 2023 March 15, 2023 0.240 (A) January 10, 2023 March 17, 2023 March 31, 2023 0.080 Year ended March 31, 2023 $ 1.410 111 Table of Contents For the Year Ended March 31, 2022 : Declaration Date Record Date Payment Date Distribution per Common Share April 13, 2021 April 23, 2021 April 30, 2021 $ 0.070 April 13, 2021 May 19, 2021 May 28, 2021 0.070 April 13, 2021 June 8, 2021 June 17, 2021 0.060 (A) April 13, 2021 June 18, 2021 June 30, 2021 0.070 July 13, 2021 July 23, 2021 July 30, 2021 0.070 July 13, 2021 August 23, 2021 August 31, 2021 0.070 July 13, 2021 September 3, 2021 September 15, 2021 0.030 (A) July 13, 2021 September 22, 2021 September 30, 2021 0.070 October 12, 2021 October 22, 2021 October 29, 2021 0.075 October 12, 2021 November 19, 2021 November 30, 2021 0.075 October 12, 2021 December 7, 2021 December 15, 2021 0.090 (A) October 12, 2021 December 23, 2021 December 31, 2021 0.075 January 11, 2022 January 21, 2022 January 31, 2022 0.075 January 11, 2022 February 4, 2022 February 14, 2022 0.120 (A) January 11, 2022 February 18, 2022 February 28, 2022 0.075 January 11, 2022 March 23, 2022 March 31, 2022 0.075 Year ended March 31, 2022: $ 1.170 For the Year Ended March 31, 2021 : Declaration Date Record Date Payment Date Distribution per Common Share April 14, 2020 April 24, 2020 April 30, 2020 $ 0.070 April 14, 2020 May 19, 2020 May 29, 2020 0.070 April 14, 2020 June 8, 2020 June 17, 2020 0.090 (A) April 14, 2020 June 19, 2020 June 30, 2020 0.070 July 14, 2020 July 24, 2020 July 31, 2020 0.070 July 14, 2020 August 24, 2020 August 31, 2020 0.070 July 14, 2020 September 23, 2020 September 30, 2020 0.070 October 13, 2020 October 23, 2020 October 30, 2020 0.070 October 13, 2020 November 20, 2020 November 30, 2020 0.070 October 13, 2020 December 23, 2020 December 31, 2020 0.070 January 12, 2021 January 22, 2021 January 29, 2021 0.070 January 12, 2021 February 17, 2021 February 26, 2021 0.070 January 12, 2021 March 18, 2021 March 31, 2021 0.070 Year ended March 31, 2021: $ 0.930 (A) Represents a supplemental distribution to common stockholders. Aggregate cash distributions to our common stockholders declared and paid for the years ended March 31, 2023, 2022 and 2021 were $ 47.0 million, $ 38.9 million, and $ 30.9 million, respectively. For the fiscal years ended March 31, 2023, 2022, and 2021, Investment Company Taxable Income exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $ 21.4 million, $ 13.9 million, and $ 16.1 million, respectively, of the first distributions paid subsequent to fiscal year-end, as having been paid in the prior year. In addition, for the fiscal years ended March 31, 2023, 2022, and 2021, net capital gains exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $ 10.6 million, $ 15.7 million, and $ 8.5 million, respectively, of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year. 112 Table of Contents We may distribute our net long-term capital gains, if any, in cash or elect to retain some or all of such gains, pay taxes at the U.S. federal corporate-level income tax rate on the amount retained, and designate the retained amount as a “deemed distribution.” If we elect to retain net long-term capital gains and deem them distributed, each U.S. common stockholder will be treated as if they received a distribution of their pro-rata share of the retained net long-term capital gain and the U.S. federal income tax paid. As a result, each U.S. common stockholder will (i) be required to report their pro-rata share of the retained gain on their tax return as long-term capital gain, (ii) receive a refundable tax credit for their pro-rata share of federal income tax paid by us on the retained gain, and (iii) increase the tax basis of their shares of common stock by an amount equal to the deemed distribution less the tax credit. To use the deemed distribution approach, we must provide written notice to our common stockholders prior to the expiration of 60 days after the close of the relevant taxable year. For the years ended March 31, 2023, 2022, and 2021 we did not elect to retain long-term capital gains and to treat them as deemed distributions to common stockholders. The components of our net assets on a tax basis were as follows: Year Ended March 31, 2023 2022 Common stock $ 34 $ 33 Capital in excess of par value 401,798 397,948 Cumulative unrealized appreciation of investments 31,129 43,760 Cumulative unrealized depreciation of other 29 — Undistributed ordinary income 21,380 13,862 Undistributed capital gain 10,552 15,731 Other temporary differences ( 25,180 ) ( 25,504 ) Net Assets $ 439,742 $ 445,830 For the years ended March 31, 2023 and 2022, we recorded the following adjustments for estimated permanent book-tax differences to reflect tax character. Results of operations, total net assets, and cash flows were not affected by these adjustments. Tax Year Ended March 31, 2023 2022 Underdistributed (overdistributed) net investment income $ 1,301 $ ( 333 ) Accumulated net realized gain in excess of distributions $ 263 $ 3,181 Capital in excess of par value $ ( 1,564 ) $ ( 2,848 ) NOTE 10. FEDERAL AND STATE INCOME TAXES We intend to continue to maintain our qualifications as a RIC for federal income tax purposes. As a RIC, we generally are not subject to federal income tax on the portion of our taxable income and gains that we distribute to stockholders. To maintain our qualification as a RIC, we must maintain our status as a BDC and meet certain source-of-income and asset diversification requirements. In addition, to qualify to be taxed as a RIC, we must distribute to stockholders at least 90% of our Investment Company Taxable Income. Our policy generally is to make distributions to our stockholders in an amount up to 100 % of our Investment Company Taxable Income. We may retain some or all of our net long-term capital gains, if any, and designate them as deemed distributions, or distribute such gains to stockholders in cash. Because we have distributed or intend to distribute 100 % of our Investment Company Taxable Income and net long-term capital gains, no income tax provisions have been recorded for the years ended March 31, 2023, 2022, and 2021. In an effort to limit federal excise taxes, we have to distribute to stockholders, during each calendar year, an amount close to the sum of (1) 98 % of our ordinary income for the calendar year, (2) 98.2 % of our net capital gains (both long-term and short-term), if any, for the one-year period ending on October 31 of the calendar year and (3) any income realized, but not distributed, in the preceding period (to the extent that income tax was not imposed on such amounts), less certain reductions, as applicable . We incurred an excise tax of $ 1.3 million, $ 0.7 million, and $ 0.5 million for the calendar years ended December 31, 2022, 2021 and 2020, respectively, which are included in Other general and administrative expenses on the accompanying Consolidated Statement of Operations . 113 Table of Contents Under the RIC Modernization Act, we are permitted to carryforward any capital losses that we may incur for an unlimited period, and such capital loss carryforwards will retain their character as either short-term or long-term capital losses. Our capital loss carryforward balance was $ 0 as of both March 31, 2023 and 2022. NOTE 11. COMMITMENTS AND CONTINGENCIES Legal Proceedings We are party to certain legal proceedings incidental to the normal course of our business. We are required to establish reserves for litigation matters where those matters present loss contingencies that are both probable and estimable. When loss contingencies are not both probable and estimable, we do not establish reserves. Based on current knowledge, we do not believe that loss contingencies, if any, arising from pending investigations, litigation, or regulatory matters will have a material adverse effect on our financial condition, results of operation, or cash flows. Additionally, based on our current knowledge, we do not believe such loss contingencies are both probable and estimable and, therefore, as of March 31, 2023 and 2022, we had no established reserves for such loss contingencies. Escrow Holdbacks From time to time, we enter into arrangements relating to exits of certain investments whereby specific amounts of the proceeds are held in escrow to be used to satisfy potential obligations, as stipulated in the sales agreements. We record escrow amounts in Restricted cash and cash equivalents, if received in cash but subject to potential obligations or other contractual restrictions, or as escrow receivables in Other assets, net, if not yet received in cash, on our accompanying Consolidated Statements of Assets and Liabilities . We establish reserves and holdbacks against escrow amounts if we determine that it is probable and estimable that a portion of the escrow amounts will not ultimately be released or received at the end of the escrow period. Reserves and holdbacks against escrow amounts were $ 0.1 million and $ 0.2 million as of March 31, 2023 and 2022, respectively. Financial Commitments and Obligations We may have line of credit and delayed draw term debt commitments to certain of our portfolio companies that have not been fully drawn. Since these line of credit and delayed draw term debt commitments have expiration dates, and we expect many will never be fully drawn, the total line of credit and delayed draw term debt commitment amounts do not necessarily represent future cash requirements. We estimate the fair value of the combined unused line of credit commitments as of March 31, 2023 and 2022 to be insignificant. We may also extend guaranties on behalf of our portfolio companies. As of March 31, 2023, there were no guaranties outstanding. As of March 31, 2022, the following guaranties were outstanding on behalf of two of our portfolio companies: • A $ 1.0 million continuing guaranty of a wholesale financing facility agreement (the “Floor Plan Facility”) between DLL Finance LLC (f/k/a Agricredit Acceptance, LLC) and CCE. The Floor Plan Facility provided CCE with financing to bridge the time and cash flow gap between the order and delivery of golf carts to customers. In conjunction with the term loan repayment by CCE in November 2022, the guaranty was released and terminated. • A $ 9.3 million guaranty that we extended in February 2022, on behalf of J.R. Hobbs, whereby we had guaranteed 50 % of their obligations with another lender, with a maximum amount of $ 9.3 million. In June 2022, the guaranty was released and terminated. As of March 31, 2023 and 2022, we have not been required to make any payments on these guaranties, or any guaranties that existed in previous periods, and we consider the credit risk to be remote and the fair value of the guaranty as of March 31, 2023 and 2022 to be not significant. 114 Table of Contents The following table summarizes the principal balances of unused line of credit and delayed draw term debt commitments and guaranties as of March 31, 2023 and 2022, which are not reflected as liabilities in the accompanying Consolidated Statements of Assets and Liabilities : As of March 31, 2023 2022 Unused line of credit and delayed draw term debt commitments $ 2,150 $ 4,250 Guaranties — 10,250 Total $ 2,150 $ 14,500 115 Table of Contents NOTE 12. FINANCIAL HIGHLIGHTS As of and for the Year Ended March 31, 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Per Common Share Data: Net asset value at beginning of year (A) $ 13.43 $ 11.52 $ 11.17 $ 12.40 $ 10.85 $ 9.95 $ 9.22 $ 9.18 8.34 9.10 Income from investment operations (B) Net investment income 1.11 0.45 0.54 1.11 0.23 0.68 0.74 0.68 0.75 0.73 Net realized gain (loss) on investments and other 0.32 0.37 0.32 1.36 2.04 0.04 0.51 ( 0.15 ) — 0.31 Taxes on deemed distributions of long-term capital gains — — — ( 0.31 ) ( 0.41 ) — — — — — Net unrealized appreciation (depreciation) of investments and other ( 0.36 ) 2.26 0.42 ( 2.38 ) 0.63 1.16 0.23 0.29 1.13 ( 1.09 ) Total from investment operations 1.07 3.08 1.28 ( 0.22 ) 2.49 1.88 1.48 0.82 1.88 ( 0.05 ) Effect of equity capital activity (B) Cash distributions to common stockholders from net investment income (C) ( 0.92 ) ( 0.91 ) ( 0.83 ) ( 0.75 ) ( 0.69 ) ( 0.84 ) ( 0.75 ) ( 0.64 ) ( 0.77 ) ( 0.71 ) Cash distributions to common stockholders from realized gains (C) ( 0.49 ) ( 0.26 ) ( 0.10 ) ( 0.28 ) ( 0.24 ) ( 0.05 ) — ( 0.11 ) — — Discounts, commissions, and offering costs ( 0.01 ) — — — — ( 0.03 ) — ( 0.01 ) ( 0.03 ) — Net accretive (dilutive) effect of equity offering (D) 0.01 — — 0.01 — ( 0.04 ) — ( 0.03 ) ( 0.22 ) — Total from equity capital activity ( 1.41 ) ( 1.17 ) ( 0.93 ) ( 1.02 ) ( 0.93 ) ( 0.96 ) ( 0.75 ) ( 0.79 ) ( 1.02 ) ( 0.71 ) Other, net (E) — — — 0.01 ( 0.01 ) ( 0.02 ) — 0.01 ( 0.02 ) — Net asset value at end of year (A) $ 13.09 $ 13.43 $ 11.52 $ 11.17 $ 12.40 10.85 9.95 9.22 9.18 8.34 Per common share market value at beginning of year $ 16.13 $ 12.23 $ 7.85 $ 11.60 $ 10.10 9.07 $ 7.02 7.40 8.27 7.31 Per common share market value at end of year $ 13.25 $ 16.13 $ 12.23 $ 7.85 $ 11.60 $ 10.10 $ 9.07 $ 7.02 $ 7.40 $ 8.27 Total investment return (F) ( 8.90 %) 42.40 % 70.65 % ( 26.23 %) 24.95 % 21.82 % 41.58 % 4.82 % 11.96 % 24.26 % Common stock outstanding at end of year (A) 33,591,505 33,205,023 33,205,023 33,049,463 32,822,459 32,653,635 30,270,958 30,270,958 29,775,958 26,475,958 Consolidated Statement of Assets and Liabilities Data: Net assets at end of year $ 439,742 $ 445,830 $ 382,364 $ 369,031 $ 407,110 $ 354,200 $ 301,082 $ 279,022 $ 273,429 $ 220,837 Average net assets (G) $ 446,899 $ 425,985 $ 365,568 $ 404,336 $ 391,786 $ 328,533 $ 294,030 $ 276,293 $ 229,350 $ 231,356 Senior Securities Data: Total borrowings, at cost $ 297,688 $ 267,584 $ 155,434 $ 54,296 $ 58,096 $ 112,096 $ 74,796 $ 100,096 $ 123,896 $ 66,250 Mandatorily redeemable preferred stock (H) $ — $ — $ 94,371 $ 132,250 $ 132,250 $ 139,150 $ 139,150 $ 121,650 $ 81,400 $ 40,000 Ratios/Supplemental Data: Ratio of net expenses to average net assets (I) 9.97 % 13.51 % 10.58 % 6.32 % 13.30 % 11.08 % 10.02 % 10.94 % 9.48 % 7.33 % Ratio of net investment income to average net assets (J) 8.28 % 3.52 % 4.91 % 8.99 % 1.92 % 6.68 % 7.63 % 7.50 % 8.68 % 8.35 % (A) Based on actual shares of common stock outstanding at the beginning or end of the corresponding year, as appropriate. 116 Table of Contents (B) Based on weighted-average basic common share data for the corresponding year. (C) The tax character of distributions is determined based on taxable income calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP. For further information on the estimated character of our distributions to common stockholders, including changes in estimates, as applicable, refer to Note 9 — Distributions to Common Stockholders . (D) During the year ended March 31, 2020, the accretive effect is the result of issuing common shares at a price above the then current NAV per share. During the year ended March 31, 2018, 2016, and 2015, the net dilutive effect is the result of issuing common shares at a price below the then current NAV per share. (E) Represents the impact of the different share amounts (weighted-average basic common shares outstanding for the corresponding year and actual common shares outstanding at the end of the year) in the Per Common Share Data calculations and rounding impacts. (F) Total investment return equals the change in the market value of our common stock from the beginning of the year, taking into account dividends reinvested in accordance with the terms of our dividend reinvestment plan. Total return does not take into account distributions that may be characterized as a return of capital. For further information on the estimated character of our distributions to common stockholders, including changes in estimates, as applicable, refer to Note 9 — Distributions to Common Stockholders . (G) Calculated using the average balance of net assets at the end of each month of the reporting year. (H) Represents the aggregate liquidation preference of our mandatorily redeemable preferred stock. (I) Ratio of net expenses to average net assets is computed using total expenses, net of any non-contractual, unconditional, and irrevocable credits of fees from the Adviser. Had we not received any non-contractual, unconditional, and irrevocable credits of fees from the Adviser, the ratio of expenses to average net assets would have been 12.58 %, 16.72 %, 13.33 %, 9.12 %, 16.45 %, 14.11 %, 13.46 %, 14.50 %, 12.90 %, and 10.20 % for the fiscal years ended March 31, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, and 2014 respectively. Had we included Virginia state taxes incurred on the deemed distributions of retained capital gains for the fiscal year ended March 31, 2020 and 2019, the ratio of net expenses to average net assets would have been 6.89 % and 14.07 %, respectively. (J) Had we not received any non-contractual, unconditional, and irrevocable credits of fees from the Adviser, the ratio of net investment income (loss) to average net assets would have been 5.66 %, 0.31 %, 2.16 %, 6.20 %, ( 1.22 %), 3.66 %, 4.19 %, 3.94 %, 5.26 %, and 5.48 % for the fiscal years ended March 31, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, and 2014 respectively. 117 Table of Contents NOTE 13. UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES In accordance with the SEC’s Regulation S-X, we do not consolidate portfolio company investments. Further, in accordance with ASC 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries. We did not have any unconsolidated subsidiaries that met any of the significance conditions under Rule 1-02(w)(2) of the SEC’s Regulation S-X as of or during at least one of the years ended March 31, 2023, 2022 and 2021. NOTE 14. SUBSEQUENT EVENTS Distributions and Dividends In April 2023, our Board of Directors declared the following monthly and supplemental cash distributions to common stockholders: Record Date Payment Date Distribution per Common Share April 21, 2023 April 28, 2023 $ 0.08 May 23, 2023 May 31, 2023 0.08 June 5, 2023 June 15, 2023 0.12 (A) June 21, 2023 June 30, 2023 0.08 Total for the Quarter: $ 0.36 (A) Represents a supplemental distribution to common stockholders. Revolving Line of Credit On April 10, 2023, we, through Business Investment, entered into Amendment No. 7 to the Credit Facility to update the reference rate from LIBOR to Term SOFR plus an 11 basis point credit spread adjustment. Director Activity Terry Lee Brubaker resigned from our Board of Directors, effective April 14, 2023. Mr. Brubaker's resignation was not a result of any disagreement with the Company on any matters relating to the Company's operations, policies, or practices. 118 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.