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Item 2. Management’s Discussion and Analysis

2025-08-12 compared with 2025-02-12 · 162 added, 347 removed, 296 unchanged (63% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All statements contained herein, other than historical facts, may constitute “forward-looking statements.” These statements may relate to, among other things, our future operating results, our business prospects and the prospects of our portfolio companies, actual and potential conflicts of interest with Gladstone Management Corporation (the “Adviser”) and its affiliates, the use of borrowed money to finance our investments, the adequacy of our financing sources and working capital, and our ability to co-invest, among other factors.

All statements contained herein, other than historical facts, may constitute “forward-looking statements.” These statements may relate to, among other things, our future operating results, our business prospects and the prospects of our portfolio companies, actual and potential conflicts of interest with Gladstone Management Corporation (the “Adviser”), our investment adviser, and its affiliates, the use of borrowed money to finance our investments, the adequacy of our financing sources and working capital, and our ability to co-invest.

In some cases, you can identify forward-looking statements by terminology such as “estimate,” “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “project,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative or variations of such terms or comparable terminology.

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Such factors include:

(1) changes in the economy and the capital markets, including stock price volatility, inflation, elevated interest rates and risks of recession;

(1) changes in the economy and the capital markets, including stock price volatility, inflation, elevated interest rates, tariffs and trade wars and risks of recession;

(2) risks associated with negotiation and consummation of pending and future transactions;

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Securities and Exchange Commission (“SEC”) on May 13, 2025 (the “Annual Report”).

We caution readers not to place undue reliance on any such forward-looking statements.

Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from historical performance.

We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.

Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from our historical performance.

We have based forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q (the “Quarterly Report”).

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The forward-looking statements contained in this Quarterly Report are excluded from the safe harbor protection provided by the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended.

In this Quarterly Report, the “Company,” “we,” “us,” and “our” refer to Gladstone Investment Corporation and its wholly-owned subsidiaries unless the context otherwise indicates.

In this Quarterly Report, the terms the “Company,” “we,” “us,” and “our” refer to Gladstone Investment Corporation and its wholly-owned subsidiaries unless the context otherwise indicates.

Dollar amounts, except per share amounts, are in thousands, unless otherwise indicated.

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We expect that our investment portfolio over time will consist of approximately 75% in debt investments and 25% in equity investments, at cost.

As of December 31, 2024, our investment portfolio was comprised of 76.3% in debt investments and 23.7% in equity investments, at cost.

As of June 30, 2025, our investment portfolio was comprised of 72.1% in debt investments and 27.9% in equity investments, at cost.

We focus on investing in lower middle market private businesses (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $4 million to $15 million) (“Lower Middle Market”) in the U.S.

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the sustainability of the business’ free cash flow and its ability to grow it over time, adequate assets for loan collateral, experienced management teams with a significant ownership interest in the portfolio company, reasonable capitalization of the portfolio company, including an ample equity contribution or cushion based on prevailing enterprise valuation multiples, and the potential to realize appreciation and gain liquidity in our equity position, if any.

We anticipate that liquidity in our equity position will be achieved through a merger or acquisition of the portfolio company, a public offering of the portfolio company’s stock, or, to a lesser extent, by exercising our right to require the portfolio company to repurchase our warrants, though there can be no assurance that we will always have these rights.

We anticipate that liquidity in our equity position will be achieved through a merger, acquisition or recapitalization of the portfolio company, a public offering of the portfolio company’s stock, or, to a lesser extent, by exercising our right to require the portfolio company to repurchase our warrants, though there can be no assurance that we will always have these rights.

We invest in portfolio companies that seek funds for management buyouts and/or growth capital to finance acquisitions, recapitalize or, to a lesser extent, refinance their existing debt facilities.

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We invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the opportunity.

In July 2012, the SEC granted us an exemptive order (the “Co-Investment Order”) that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Capital Corporation and Gladstone Alternative Income Fund ("Gladstone Alternative") and any future BDC or closed-end management investment company that is advised (or sub-advised if it controls the fund) by the Adviser, or any combination of the foregoing, subject to the conditions in the Co-Investment Order.

In July 2012, the SEC granted us an exemptive order (the “Co-Investment Order”) that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Capital Corporation and Gladstone Alternative Income Fund ("Gladstone Alternative") and any future BDC or registered closed-end management investment company that is advised (or sub-advised if it controls the fund) by the Adviser, or any combination of the foregoing, subject to the conditions in the Co-Investment Order.

We believe the Co-Investment Order has enhanced and will continue to enhance our ability to further our investment objectives and strategies.

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While the business environment remains competitive, we continue to see new investment opportunities consistent with our investment strategy of providing a combination of debt and equity in support of management and independent sponsor-led buyouts of Lower Middle Market companies in the U.S.

During the nine months ended December 31, 2024, we invested in four new portfolio companies and exited two portfolio companies.

From our initial public offering in June 2005 through December 31, 2024, we have invested in 62 companies, excluding investments in syndicated loans, for a total of approximately $2.0 billion, before giving effect to principal repayments and divestitures.

During the three months ended June 30, 2025, we invested in two new portfolio companies.

From our initial public offering in June 2005 through June 30, 2025, we have invested in 64 companies, excluding investments in syndicated loans, for a total of approximately $2.1 billion, before giving effect to principal repayments and divestitures.

The majority of the debt securities in our portfolio have a success fee component, which enhances the yield on our debt investments.

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Due to the contingent nature of success fees, there are no guarantees that we will be able to collect any or all of these success fees or know the timing of any such collections.

As a result, as of December 31, 2024, we had unrecognized, contractual success fees of $52.8 million, or $1.43 per common share.

As a result, as of June 30, 2025, we had unrecognized, contractual success fees of $55.6 million, or $1.49 per common share.

Consistent with accounting principles generally accepted in the U.S.

(“GAAP”), we have not recognized success fee receivables and related income in our accompanying Consolidated Financial Statements until earned.

From inception through December 31, 2024, we exited our investments of 32 portfolio companies that we acquired under our buyout strategy (which excludes investments in syndicated loans).

From inception through June 30, 2025, we exited our investments in 33 portfolio companies that we acquired under our buyout strategy.

In the aggregate, these sales have generated $353.4 million in net realized gains and $45.4 million in other income upon exit, for a total increase to our net assets of $398.8 million.

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The 33 liquidity events have offset any realized losses since inception, which were primarily incurred during the 2008-2009 recession in connection with the sale of performing syndicated loans at a realized loss to pay off a former lender.

The successful exits, in part, enabled us to increase the monthly distribution run rate by 100.0% from March 2011 through December 31, 2024, and allowed us to declare and pay 23 supplemental distributions to common stockholders from March 2012 through December 31, 2024.

The successful exits, in part, enabled us to increase the monthly distribution by 100.0% from March 2011 through June 30, 2025, and allowed us to declare and pay 24 supplemental distributions to common stockholders through June 30, 2025.

Capital Raising

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We have successfully extended the Credit Facility’s revolving period multiple times, most recently to October 2026, and currently have a total commitment amount of $270.0 million (with a potential total commitment of $300.0 million through additional commitments from new or existing lenders).

During the nine months ended December 31, 2024, we issued our 7.875% 2030 Notes for gross proceeds of $126.5 million and sold 148,714 shares of our common stock under our common stock "at-the-market" program ("2024 Common Stock ATM Program") for gross proceeds of approximately $2.0 million.

During the year ended March 31, 2024, we issued the 8.00% 2028 Notes for gross proceeds of $74.8 million and sold 3,097,162 shares of our common stock under our common stock "at-the-market" program ("2022 Common Stock ATM Program") for gross proceeds of approximately $44.5 million.

During the three months ended June 30, 2025, we sold 515,295 shares of our common stock under our "at-the-market" program (the "2024 Common Stock ATM Program") for gross proceeds of approximately $7.3 million.

During the year ended March 31, 2025, we issued the 7.875% 2030 Notes for gross proceeds of $126.5 million and sold 148,714 shares of our common stock under our 2024 Common Stock ATM Program for gross proceeds of approximately $2.0 million.

Refer to “ Liquidity and Capital Resources — Revolving Line of Credit ” for further discussion of the Credit Facility and to “ Liquidity and Capital Resources — Equity — Common Stock ” further discussion of our common stock.

Although we have been able to access the capital markets historically, market conditions may continue to affect the trading price of our common stock and thus our ability to finance new investments through the issuance of common equity.

On December 31, 2024, the closing market price of our common stock was $ 13.25 per share, representing a 0.4 % discount to our net asset value (“NAV”) of $ 13.30 per share as of December 31, 2024.

On June 30, 2025, the closing market price of our common stock was $ 14.27 per share, representing a 9.9 % premium to our net asset value (“NAV”) of $ 12.99 per share as of June 30, 2025.

When our common stock trades below NAV, our ability to issue additional equity is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock at an issuance price below the then-current NAV per share without stockholder approval, other than through sales to our then-existing stockholders pursuant to a rights offering.

Regulatory Compliance

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

On April 10, 2018, our Board of Directors, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act.

As a result, our asset coverage requirements for senior securities changed from 200% to 150%, effective as of April 10, 2019, one year after the date of the Board of Directors’ approval.

As of December 31, 2024, our asset coverage ratio on our senior securities representing indebtedness was 185.9%.

As of June 30, 2025, our asset coverage ratio on our senior securities representing indebtedness was 189.8%.

Investment Highlights

Investment Activity

During the nine months ended December 31, 2024, the following significant transactions occurred:

• In May 2024, our remaining shares in Funko Acquisition Holdings, LLC ("Funko") were sold, representing an exit of our investment in Funko, and resulting in a return of our equity cost basis of $21 thousand and a realized gain of $2 thousand.

• In July 2024, we invested an additional $18.5 million through secured first lien debt in Nocturne Luxury Villas, Inc.

("Nocturne") to fund an add-on acquisition.

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

• In November 2024, we invested $27.2 million in a new portfolio company, Pyrotek Special Effects, Inc.

("Pyrotek"), in the form of $20.1 million of secured first lien debt and $7.1 million of preferred equity.

Pyrotek, headquartered in Ontario, Canada, is a leading provider of special effects services and solutions for the live entertainment industry.

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

Gladstone Alternative is a registered, non-diversified, closed-end management investment company that operates as an interval fund.

• In December 2024, we invested $71.3 million in a new portfolio company, Nielsen-Kellerman, Inc.

("Nielsen-Kellerman"), in the form of $49.1 million of secured first lien debt and $22.2 million of preferred equity.

Nielsen-Kellerman, headquartered in Boothwyn, Pennsylvania, designs, manufactures, and distributes a wide range of rugged, waterproof environmental measurement and sports performance instruments.

• In December 2024, we invested $78.7 million in a new portfolio company, Ricardo Defense, Inc.

("Ricardo"), in the form of $61.3 million of secured first lien debt and $17.4 million of preferred equity.

Ricardo, headquartered in Troy, Michigan, with operations in California, Texas and Alabama and overseas, develops engineering and product solutions for U.S.

Army vehicle and logistics programs.

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

• In May 2025, we invested $49.5 million in a new portfolio company, Smart Chemical Solutions, LLC, ("Smart Chemical"), in the form of $35.7 million of secured first lien debt and $13.8 million of preferred equity.

Smart Chemical, headquartered in Midland, Texas, is a leading provider of production chemicals for onshore oil and gas operators throughout the United States.

• In May 2025, we invested $12.8 million in a new portfolio company, Sun State Nursery and Landscaping, LLC, ("Sun State"), in the form of $9.8 million of secured first lien debt and $3.1 million of preferred equity.

Sun State, headquartered in Jacksonville, Florida, is a leading commercial landscaping installation and maintenance provider in the Jacksonville area.

• In June 2025, we restructured our investment in PSI Molded Plastics, Inc.

As a result of the restructuring, we converted debt with a cost basis of $10.6 million into preferred equity.

Distributions and Dividends

• In January 2025, our Board of Directors declared the following monthly cash distributions to common stockholders:

• In July 2025, our Board of Directors declared the following monthly cash distributions to common stockholders:

Payment Date Distribution per Common Share

January 24, 2025 January 31, 2025 $ 0.08

February 19, 2025 February 28, 2025 0.08

March 19, 2025 March 31, 2025 0.08

July 21, 2025 July 31, 2025 $ 0.08

August 20, 2025 August 29, 2025 0.08

September 22, 2025 September 30, 2025 0.08

Total for the Quarter:

Investment Advisory Agreement

On January 24, 2025, the Company entered into a new investment advisory and management agreement (the “New Advisory Agreement”) with the Adviser.

The New Advisory Agreement, which was approved by the Company’s stockholders at a stockholders’ meeting on January 4, 2024, was entered into as a result of a change of control of the Adviser pursuant to the previously disclosed voting trust agreement, among David Gladstone, Lorna Gladstone, Laura Gladstone, Kent Gladstone and Jessica Martin, each as a trustee and collectively, as the board of trustees of the voting trust, the Adviser and certain stockholders of the Adviser.

There are no changes to the terms, including the fee structure and services to be provided, of the prior Advisory Agreement in the New Advisory Agreement, other than the date and term of the New Advisory Agreement as compared to the prior Advisory Agreement.

The New Advisory Agreement and the Advisory Agreement are collectively referred to herein as the Advisory Agreement.

Revolving Line of Credit

On February 10, 2025, we, through our wholly-owned subsidiary Gladstone Business Investment, LLC (“Business Investment”), entered into Amendment No.

10 to the Credit Facility with KeyBank National Association (“KeyBank”), as administrative agent, joint lead arranger and lender, Fifth Third Bank as managing agent, joint lead arranger and lender, the Adviser, as servicer, and certain other lenders party thereto.

The Credit Facility was amended to increase the size from $200.0 million to $250.0 million and update certain existing terms.

The Credit Facility continues to include customary terms, covenants, events of default and constraints on borrowing availability based on collateral tests for a credit facility of its size and nature.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended December 31, 2024 to the Three Months Ended December 31, 2023

For the Three Months Ended December 31,

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

For the Three Months Ended June 30,

2025 2024 $ Change % Change

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REALIZED AND UNREALIZED GAIN (LOSS)

Net realized gain — 43,461 (43,461) (100.0) %

Net unrealized appreciation (depreciation) 37,329 (46,626) 83,955 NM

Net realized and unrealized gain (loss) 37,329 (3,165) 40,494 NM

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 38,490 $ 6,579 $ 31,911 485.0 %

Net realized gain on investments — 2 (2) (100.0) %

Net unrealized depreciation (1,316) (18,942) 17,626 (93.1) %

Net realized and unrealized loss (1,316) (18,940) 17,624 (93.1) %

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,772 $ (6,526) $ 14,298 NM

WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING

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Net investment income $ 0.25 $ 0.34 $ (0.09) (26.5) %

Net increase in net assets resulting from operations $ 1.05 $ 0.19 $ 0.86 452.6 %

Net increase (decrease) in net assets resulting from operations $ 0.21 $ (0.18) $ 0.39 NM

NM - Not meaningful

Investment Income

Total investment income decreased $1.7 million, or 7.4%, for the three months ended December 31, 2024, as compared to the prior year period, primarily due to a decrease in interest income, and dividend and success fee income.

Interest income from our investments in debt securities decreased $1.2 million, or 5.4%, for the three months ended December 31, 2024, as compared to the prior year period.

Total investment income increased $1.4 million, or 6.2%, for the three months ended June 30, 2025, as compared to the prior year period, primarily due to an increase in interest income and dividend and success fee income.

Interest income from our investments in debt securities increased $1.0 million, or 5.0%, for the three months ended June 30, 2025, as compared to the prior year period.

Generally, the level of interest income from investments is directly related to the weighted-average principal balance of our interest-bearing investment portfolio outstanding during the period, multiplied by the weighted-average yield.

The weighted-average principal balance of our interest-bearing investment portfolio during the three months ended December 31, 2024 was $579.7 million, compared to $594.3 million for the prior year period.

This decrease was primarily due to $61.5 million of pay-offs, restructurings, or write-offs of debt investments and $30.8 million of loans placed on non-accrual status after September 30, 2023, partially offset by $68.0 million of follow-on debt investments in existing portfolio companies and the origination of $20.5 million of new debt investments after September 30, 2023, and their respective impact on the weighted-average principal balance when considering timing of new investments, pay-offs, restructurings, write-offs, and accrual status changes, as applicable.

The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 14.0% for the three months ended December 31, 2024, compared to 14.4% for the prior year period.

The weighted-average principal balance of our interest-bearing investment portfolio during the three months ended June 30, 2025 was $610.0 million, compared to $571.0 million for the prior year period.

This increase was primarily due to the origination of $176.4 million of new debt investments and $38.8 million of follow-on debt investments in existing portfolio companies, partially offset by $128.0 million of pay-offs, restructurings, or write-offs of debt investments and $30.8 million of existing loans placed on non-accrual status after March 31, 2024, and their respective impact on the weighted-average principal balance when considering the timing of new investments, pay-offs, restructurings, write-offs, and accrual status changes, as applicable.

During the three months ended June 30, 2025, we collected $1.5 million in past due interest from SFEG Holdings, Inc.

("SFEG") that was previously on non-accrual status.

We had no collections of past due interest during the three months ended June 30, 2024.

The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 14.1% for the three months ended June 30, 2025, compared to 14.5% for the prior year period.

The weighted-average yield may vary from period to period, based on the current stated interest rate on interest-bearing investments, coupled with any collection of past due interest during the period.

As of December 31, 2024, our loans to B+T Group Acquisition, Inc.

As of June 30, 2025, our loans to B+T Group Acquisition, Inc.

("B+T"), Diligent Delivery Systems ("Diligent"), Edge Adhesives Holdings, Inc.

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Hobbs") were on non-accrual status, with an aggregate debt cost basis of $90.3 million.

As of December 31, 2023, our loans to Edge, J.R.

Hobbs and The Mountain Corporation were on non-accrual status, with an aggregate debt cost basis of $66.9 million.

As of December 31, 2024, Nocturne represented 10.9% of the total investment portfolio at fair value.

As of March 31, 2024, SFEG Holdings, Inc.

("SFEG") represented 10.1% of the total investment portfolio at fair value.

Dividend and success fee income for the three months ended December 31, 2024 decreased $0.5 million from the prior year period.

During the three months ended December 31, 2024, dividend and success fee income consisted of $0.8 million of success fee income.

During the three months ended December 31, 2023, dividend and success fee income consisted of $1.4 million of success fee income.

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased $6.9 million, or 51.5%, during the three months ended December 31, 2024, as compared to the prior year period, primarily due to an increase in incentive fees and base management fee, partially offset by an increase in fee credits from the Adviser.

In accordance with GAAP, during the three months ended December 31, 2024, we recorded a $7.5 million capital gains-based incentive fee compared to a $0.6 million reversal during the three months ended December 31, 2023.

As of June 30, 2024, certain of our loans to B+T, Diligent, Edge and J.R.

Hobbs were on non-accrual status, with an aggregate debt cost basis of $86.1 million.

As of June 30, 2025 and March 31, 2025, SFEG represented 10.6% and 10.8% of the total investment portfolio at fair value, respectively.

Dividend and success fee income for the three months ended June 30, 2025 increased $0.3 million, or 22.1%, from the prior year period.

During the three months ended June 30, 2025, dividend and success fee income consisted of $1.1 million of dividend income and $0.8 million of success fee income.

During the three months ended June 30, 2024, dividend and success fee income consisted of $1.6 million of success fee income.

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased $4.7 million, or 48.1%, during the three months ended June 30, 2025, as compared to the prior year period, primarily due to a decrease in the reversal of previously accrued capital gains-based incentive fees and an increase in interest expense, partially offset by an increase in fee credits from the Adviser and a decrease in other expense.

In accordance with GAAP, during the three months ended June 30, 2025, we recorded a $0.2 million reversal of previously accrued capital gains-based incentive fee compared to a $3.8 million reversal during the three months ended June 30, 2024.

The capital gains-based incentive fee is a result of the net impact of net realized gains and net unrealized appreciation (depreciation) on investments during the respective periods.

The income-based incentive fee decreased by $0.4 million, for the three months ended December 31, 2024, as compared to the prior year period, primarily due to a decrease in pre-incentive fee net investment income, partially offset by a decrease in net assets, which drives the hurdle rate.

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

Three Months Ended December 31,

Average total assets subject to base management fee (A)

Three Months Ended June 30,

Average total assets subject to base management fee (A)(B)

$ 1,016,000 $ 923,600

Multiplied by prorated annual base management fee of 2.0% 0.5 % 0.5 %

Base management fee (B)

Base management fee (C)

$ 5,080 $ 4,618

Credits to fees from Adviser - other (B)

Credits to fees from Adviser - other (C)

(1,399) (627)

Net base management fee $ 3,681 $ 3,991

Loan servicing fee (B)

Loan servicing fee (C)

$ 2,672 $ 2,222

Credits to base management fee - loan servicing fee (B)

Credits to base management fee - loan servicing fee (C)

(2,672) (2,222)

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Incentive fee – income-based $ — $ —

Incentive fee – capital gains-based (C)

Total incentive fee (B)

Incentive fee – capital gains-based (D)

(209) (3,788)

Credits to fees from Adviser - other (B)

Total incentive fee (C)

$ (209) $ (3,788)

Credits to fees from Adviser - other (C)

Net total incentive fee $ (209) $ (3,788)

(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 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.

Interest expense decreased $0.1 million, or 2.1%, during the three months ended December 31, 2024, as compared to the prior year period, primarily due to decreased borrowings on the Credit Facility, partially offset by an increase in the effective interest rate.

The weighted-average balance outstanding under the Credit Facility during the three months ended December 31, 2024 was $41.9 million, compared to $77.4 million in the prior year period.

The effective interest rate on the Credit Facility, excluding the impact of deferred financing costs, during the three months ended December 31, 2024 was 11.8%, as compared to 9.2% in the prior year period.

The increase in the effective interest rate on the Credit Facility was primarily a result of an increase in unused commitment fees on the undrawn portion of the Credit Facility, partially offset by lower interest rates on the drawn portion of the Credit Facility during the three months ended December 31, 2024.

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

(D) 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.

Interest expense increased $2.0 million, or 31.2%, during the three months ended June 30, 2025, as compared to the prior year period, primarily due to the issuance of the 7.785% 2030 Notes in December 2024 and an increase in the effective interest rate, partially offset by decreased borrowings on our Credit Facility.

The weighted-average balance outstanding under our Credit Facility during the three months ended June 30, 2025 was $36.3 million, compared to $64.7 million in the prior year period.

The effective interest rate on our Credit Facility, excluding the impact of deferred financing costs, during the three months ended June 30, 2025 was 14.0%, as compared to 10.8% in the prior year period.

The increase in the effective interest rate on the Credit Facility was primarily a result of an increase in unused commitment fees on the undrawn portion of the Credit Facility, partially offset by lower interest rates on the drawn portion of our Credit Facility during the three months ended June 30, 2025.

Other expenses decreased $0.8 million, or 41.3%, during the three months ended June 30, 2025, as compared to the prior year period, due to a decrease in bad debt expense, partially offset by an increase in professional fees and tax expense.

Realized and Unrealized Gain (Loss)

The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the three months ended December 31, 2024 and 2023 were as follows:

Three Months Ended December 31, 2024

Portfolio Company Realized Gain (Loss) Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

Nocturne Luxury Villas, Inc.

The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the three months ended June 30, 2025 and 2024 were as follows:

Three Months Ended June 30, 2025

Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

ImageWorks Display and Marketing Group, Inc.

$ — $ 5,266 $ — $ 5,266

The E3 Company, LLC — 11,895 — 11,895

SFEG Holdings, Inc.

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— 2,982 — 2,982

ImageWorks Display and Marketing Group, Inc.

— 3,269 — 3,269

The E3 Company, LLC — 2,696 — 2,696

Mason West, LLC — 2,517 — 2,517

UPB Acquisition, Inc.

— 2,495 — 2,495

- Atlanta, LLC — 1,635 — 1,635

Brunswick Bowling Products, Inc.

— 1,488 — 1,488

Old World Christmas, Inc.

— 1,373 — 1,373

Ginsey Home Solutions, Inc.

Home Concepts Acquisition, Inc.

— 1,330 — 1,330

The Maids International, LLC — 1,101 — 1,101

Mason West, LLC — (1,671) — (1,671)

Horizon Facilities Services, Inc.

— 1,100 — 1,100

Galaxy Technologies Holdings, Inc.

— (2,051) — (2,051)

PSI Molded Plastics, Inc.

Nielsen-Kellerman Acquisition Corp.

Detroit Defense, Inc.

Pyrotek Special Effects, Inc.

Phoenix Door Systems, Inc.

— (1,600) — (1,600)

1 unchanged sentence

— (3,304) — (3,304)

Other, net (<$1.0 million, net) — 603 — 603

Total $ — $ 37,329 $ — $ 37,329

Three Months Ended December 31, 2023

Portfolio Company Realized Gain (Loss) Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

Dema/Mai Holdings, Inc.

$ — $ 5,655 $ — $ 5,655

Nth Degree Investment Group, LLC — 3,274 — 3,274

Educators Resources, Inc.

— 2,229 — 2,229

Brunswick Bowling Products, Inc.

— 1,319 — 1,319

ImageWorks Display and Marketing Group, Inc.

— 1,205 — 1,205

Counsel Press, Inc.

43,459 — (43,566) (107)

Horizon Facilities Service, Inc.

— (1,204) — (1,204)

Home Concepts Acquisition, Inc.

Ginsey Home Solutions, Inc.

— (3,468) — (3,468)

Nocturne Villas Rentals, Inc.

Galaxy Technologies Holdings, Inc.

— (3,480) — (3,480)

Mason West, LLC — (2,484) — (2,484)

The Maids International, LLC — (3,728) — (3,728)

PSI Molded Plastics, Inc.

— (6,134) — (6,134)

B+T Group Acquisition, Inc.

Brunswick Bowling Products, Inc.

— (6,392) — (6,392)

1 unchanged sentence

Total $ — $ (1,047) $ — $ (1,047)

Net Realized Gain (Loss)

During the three months ended December 31, 2024, we did not record any net realized gains or losses on investments.

During the three months ended December 31, 2023, we recorded net realized gains on investments of $43.5 million, due to a $43.5 million realized gain from the exit of Counsel Press, Inc.

("Counsel Press").

Net Unrealized Appreciation (Depreciation)

Net unrealized appreciation of investments of $37.3 million for the three months ended December 31, 2024 was primarily due to an increase in the performance of certain of our portfolio companies and an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies, in addition to increased performance of certain of our other portfolio companies.

These increases were partially offset by decreased performance of certain of our other portfolio companies.

Net unrealized depreciation of investments of $46.5 million for the three months ended December 31, 2023 was primarily due to the reversal of unrealized appreciation of Counsel Press upon exit, a decrease in transaction multiples used to estimate the fair value of certain of our portfolio companies and a decrease in performance of certain of our portfolio companies.

These decreases were partially offset by increased performance of certain of our other portfolio companies.

Across our entire investment portfolio, we recorded net unrealized appreciation of $39.5 million on our equity positions and net unrealized depreciation of $2.2 million on our debt positions for the three months ended December 31, 2024 .

As of December 31, 2024 , the fair value of our investment portfolio was more than the cost basis by $50.5 million, as compared to September 30, 2024, when the fair value of our investment portfolio was more than the cost basis by $13.2 million, representing net unrealized appreciation of $37.3 million for the three months ended December 31, 2024 .

Our entire portfolio had a fair value of 104.9% of cost as of December 31, 2024 .

Comparison of the Nine Months Ended December 31, 2024 to the Nine Months Ended December 31, 2023

For the Nine Months Ended December 31,

2024 2023 $ Change % Change

INVESTMENT INCOME

Interest income $ 62,149 $ 60,369 $ 1,780 2.9 %

Dividend and success fee income 3,965 3,289 676 20.6 %

Total investment income 66,114 63,658 2,456 3.9 %

Base management fee 13,937 12,874 1,063 8.3 %

Loan servicing fee 6,821 6,829 (8) (0.1) %

Incentive fee 7,797 15,401 (7,604) (49.4) %

Administration fee 1,478 1,306 172 13.2 %

Interest expense 19,264 17,598 1,666 9.5 %

Amortization of deferred financing costs and discounts 1,951 1,708 243 14.2 %

Other 4,968 3,434 1,534 44.7 %

Expenses before credits from Adviser 56,216 59,150 (2,934) (5.0) %

Credits to fees from Adviser (10,968) (11,946) 978 (8.2) %

Total expenses, net of credits to fees 45,248 47,204 (1,956) (4.1) %

NET INVESTMENT INCOME 20,866 16,454 4,412 26.8 %

REALIZED AND UNREALIZED GAIN (LOSS)

Net realized gain 42,305 44,905 (2,600) (5.8) %

Net unrealized (depreciation) appreciation (15,725) 1,362 (17,087) NM

Net realized and unrealized gain (loss) 26,580 46,267 (19,687) (42.6) %

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 47,446 $ 62,721 $ (15,275) (24.4) %

WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING

Basic and diluted 36,701,783 33,921,300 2,780,483 8.2 %

BASIC AND DILUTED PER COMMON SHARE:

Net investment income $ 0.57 $ 0.49 $ 0.08 16.3 %

Net increase in net assets resulting from operations $ 1.29 $ 1.85 $ (0.56) (30.3) %

NM = Not Meaningful

Investment Income

Total investment income increased $2.5 million, or 3.9%, for the nine months ended December 31, 2024, as compared to the prior year period, primarily due to an increase in interest income, and dividend and success fee income.

Interest income from our investments in debt securities increased $1.8 million, or 2.9%, for the nine months ended December 31, 2024, as compared to the prior year period.

Generally, the level of interest income from investments is directly related to the principal balance of our interest-bearing investment portfolio outstanding during the period, multiplied by the weighted-average yield.

The weighted-average principal balance of our interest-bearing investment portfolio during the nine months ended December 31, 2024 was $576.1 million, compared to $544.6 million for the prior year period.

This increase was primarily due to $116.4 million of follow-on debt investments in existing portfolio companies, the origination of $67.3 million of new debt investments, partially offset by $61.5 million of pay-offs, restructurings, or write-offs of debt investments and $30.8 million of loans placed on non-accrual status after March 31, 2023, and their respective impact on the weighted-average principal balance when considering timing of new investments, pay-offs, restructurings, write-offs, and accrual status changes, as applicable.

The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 14.3% for the nine months ended December 31, 2024, compared to 14.5% for the prior year period.

During the nine months ended December 31, 2024 and 2023, we had no collections of past due interest.

As of December 31, 2024, our loans to B+T, Diligent, Edge, and J.R.

Hobbs were on non-accrual status, with an aggregate debt cost basis of $90.0 million.

As of December 31, 2023, our loans to Edge, J.R.

Hobbs and The Mountain were also on non-accrual status, with an aggregate debt cost basis of $66.9 million.

As of December 31, 2024, Nocturne represented 10.9% of the total investment portfolio at fair value.

As of March 31, 2024, SFEG represented 10.1% of the total investment portfolio at fair value.

Dividend and success fee income for the nine months ended December 31, 2024 increased $0.7 million, or 20.6% from the prior year period.

During the nine months ended December 31, 2024, dividend and success fee income consisted of $2.5 million of success fee income and $1.4 million of dividend income.

During the nine months ended December 31, 2023, dividend and success fee income consisted of $1.9 million of dividend income and $1.4 million of success fee income.

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, decreased $2.0 million, or 4.1%, during the nine months ended December 31, 2024, as compared to the prior year period, primarily due to a decrease in incentive fees, partially offset by an increase in interest expense, other expense and base management fee and a decrease in fee credits from the Adviser.

In accordance with GAAP, we recorded a $5.3 million capital gains-based incentive fee during the nine months ended December 31, 2024, compared to a $9.3 million capital gains-based incentive fee recorded during the nine months ended December 31, 2023.

The capital gains-based incentive fee was a result of the net impact of net realized gains and net unrealized appreciation (depreciation) on investments during the respective periods.

The income-based incentive fee decreased by $3.7 million for the nine months ended December 31, 2024, as compared to the prior year period, primarily due to a decrease in pre-incentive fee net investment income and an increase in net assets, which drives the hurdle rate.

Nine Months Ended December 31,

Average total assets subject to base management fee (A)

$ 929,133 $ 858,267

Multiplied by prorated annual base management fee of 2.0% 1.5 % 1.5 %

Base management fee (B)

$ 13,937 $ 12,874

Credits to fees from Adviser - other (B)

(4,147) (5,117)

Net base management fee $ 9,790 $ 7,757

Loan servicing fee (B)

$ 6,821 $ 6,829

Credits to base management fee - loan servicing fee (B)

(6,821) (6,829)

Net loan servicing fee $ — $ —

Incentive fee – income-based $ 2,481 $ 6,142

Incentive fee – capital gains-based (C)

Total incentive fee (B)

Three Months Ended June 30, 2024

Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

UPB Acquisition, Inc.

$ — $ 3,967 $ — $ 3,967

Credits to fees from Adviser - other (B)

Net total incentive fee $ 7,797 $ 15,401

(B) Reflected as a line item on our 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.

Interest expense increased $1.7 million, or 9.5%, during the nine months ended December 31, 2024, as compared to the prior year period, primarily due to interest expense related to the 8.00% 2028 Notes issued in May 2023 and an increase in the effective interest rate, partially offset by decreased borrowings on the Credit Facility.

The weighted-average balance outstanding on the Credit Facility during the nine months ended December 31, 2024 was $55.8 million as compared to $57.1 million in the prior year period.

The effective interest rate on the Credit Facility, excluding the impact of deferred financing costs, during the nine months ended December 31, 2024 was 11.1%, as compared to 10.2% in the prior year period.

The increase in the effective interest rate on the Credit Facility was primarily a result of an increase in unused commitment fees on the undrawn portion of the Credit Facility during the nine months ended December 31, 2024.

Other expenses increased $1.5 million, or 44.7%, during the nine months ended December 31, 2024, as compared to the prior year period, due to an increase in bad debt expense and professional fees.

Realized and Unrealized Gain (Loss)

The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the nine months ended December 31, 2024 and 2023 were as follows:

Nine Months Ended December 31, 2024

Portfolio Company Realized Gain (Loss) Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

Nocturne Luxury Villas, Inc.

Ginsey Home Solutions, Inc.

— 3,475 — 3,475

The E3 Company, LLC — 2,646 — 2,646

SFEG Holdings, Inc.

— 8,139 — 8,139

Schylling, Inc.

— 7,804 — 7,804

Old World Christmas, Inc.

— 1,531 — 1,531

UPB Acquisition, Inc.

— 5,049 — 5,049

ImageWorks Display and Marketing Group, Inc.

— 3,932 — 3,932

Ginsey Home Solutions, Inc.

— 3,574 — 3,574

- Atlanta, LLC — 2,984 — 2,984

The Maids International, LLC — 2,352 — 2,352

Dema/Mai Holdings, Inc.

— 1,073 — 1,073

Diligent Delivery Systems — (986) — (986)

Home Concepts Acquisition, Inc.

— (1,238) — (1,238)

B+T Group Acquisition, Inc.

— (2,303) — (2,303)

Edge Adhesives Holdings, Inc.

— (2,402) — (2,402)

Nth Degree Investment Group, LLC 42,284 (7,195) (38,028) (2,939)

PSI Molded Plastics, Inc.

— (876) — (876)

Educators Resource, Inc.

— (5,507) — (5,507)

Mason West, LLC — (10,285) — (10,285)

Horizon Facilities Services, Inc.

— (19,888) — (19,888)

Other, net (<$1.0 million, net) 21 (384) 4 (359)

Total $ 42,305 $ 22,299 $ (38,024) $ 26,580

Nine Months Ended December 31, 2023

Portfolio Company Realized Gain (Loss) Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

Counsel Press, Inc.

$ 43,459 $ 22,676 $ (43,566) $ 22,569

Nth Degree Investment Group, LLC — 15,951 — 15,951

Educators Resource, Inc.

— 12,792 — 12,792

Brunswick Bowling Products, Inc.

— 9,630 — 9,630

Mason West, LLC — 9,206 — 9,206

SFEG Holdings, Inc.

— 7,325 — 7,325

Dema/Mai Holdings, Inc.

— 3,780 — 3,780

Galaxy Technologies Holdings, Inc.

— 3,539 — 3,539

The Maids International, LLC — 3,190 — 3,190

Utah Pacific Bridge & Steel, Ltd.

— 1,833 — 1,833

Ginsey Home Solutions, Inc.

Edge Adhesives Holdings, Inc.

— (1,443) — (1,443)

Gladstone SOG Investments, Inc.

Phoenix Doors Systems, Inc.

— (1,678) — (1,678)

- Atlanta, LLC — (741) — (741)

Nocturne Luxury Villas, Inc.

— (1,719) — (1,719)

Old World Christmas, Inc.

273 (1,394) — (1,121)

Diligent Delivery Systems — (1,207) — (1,207)

Home Concepts Acquisition, Inc.

— (1,565) — (1,565)

PSI Molded Plastics, Inc.

— (5,635) — (5,635)

Horizon Facilities Services, Inc.

— (6,963) — (6,963)

Schylling, Inc.

— (8,546) — (8,546)

ImageWorks Display and Marketing Group, Inc.

— (2,607) — (2,607)

B+T Group Acquisition, Inc.

Horizon Facilities Service, Inc.

— (6,411) — (6,411)

Nth Degree Investment Group, LLC — (7,195) — (7,195)

Mason West, LLC — (9,201) — (9,201)

Other, net (<$1.0 million, net) 2 (508) 4 (502)

Total $ 2 $ (18,946) $ 4 $ (18,940)

Net Realized Gain (Loss)

During the nine months ended December 31, 2024, we recorded net realized gains on investments of $42.3 million, primarily due to a $42.3 million realized gain from the exit of Nth Degree.

During the nine months ended December 31, 2023, we recorded net realized gains on investments of $44.9 million, primarily due to a $43.5 million realized gain from the exit of Counsel Press, $1.2 million of realized gains related to certain prior period exits and $0.3 million of realized gain from the recapitalization of Old World.

Net Unrealized Appreciation (Depreciation)

Net unrealized depreciation of investments of $15.7 million for the nine months ended December 31, 2024 was primarily due to the reversal of unrealized appreciation of Nth Degree upon exit and decreased performance of certain of our portfolio companies.

These decreases were partially offset by an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies and increased performance of certain of our portfolio companies.

Net unrealized appreciation of investments of $1.4 million for the nine months ended December 31, 2023 was primarily due to increased performance of certain of our portfolio companies and an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies.

These increases were partially offset by a reversal of unrealized appreciation of Counsel Press upon exit and decreased performance of certain of our other portfolio companies.

Across our entire investment portfolio, we recorded net unrealized depreciation of $27.0 million on our debt positions and appreciation of $11.3 million on our equity positions, for the nine months ended December 31, 2024 .

As of December 31, 2024 , the fair value of our investment portfolio was more than the cost basis by $50.5 million , as compared to March 31, 2024, when the fair value of our investment portfolio was more than the cost basis by $66.2 million , representing net unrealized depreciation of $15.7 million for the nine months ended December 31, 2024 .

Our entire portfolio had a fair value of 104.9% of cost as of December 31, 2024 .

Net Realized Gain (Loss) on Investments

During the three months ended June 30, 2025, we did not record any net realized gains or losses on investments.

During the three months ended June 30, 2024, we recorded net realized gains on investments of $2 thousand, due to the realized gain from the exit of Funko Acquisition Holdings, LLC.

Net Unrealized Appreciation (Depreciation) of Investments

Net unrealized depreciation of investments of $1.0 million for the three months ended June 30, 2025 was primarily due to a decrease in the performance of certain of our portfolio companies.

These decreases were partially offset by increased performance of certain of our other portfolio companies and an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies.

Net unrealized depreciation of investments of $18.9 million for the three months ended June 30, 2024 was primarily due to a decrease in transaction multiples used to estimate the fair value of certain of our portfolio companies and a decrease in performance of certain of our portfolio companies.

These decreases were partially offset by increased performance of certain of our other portfolio companies.

Across our entire investment portfolio, we recorded net unrealized depreciation of $2.6 million on our equity positions and net unrealized appreciation of $1.6 million on our debt investments for the three months ended June 30, 2025 .

As of June 30, 2025 , the fair value of our investment portfolio was more than our cost basis by $39.2 million, compared to March 31, 2025, when the fair value of our investment portfolio was more than our cost basis by $40.3 million.

This resulted in net unrealized depreciation of $1.0 million for the three months ended June 30, 2025 .

Our entire portfolio was fair valued at 103.9% of cost as of June 30, 2025 .

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Net cash used in operating activities for the nine months ended December 31, 2024 was $96.4 million compared to net cash used in operating activities of $75.7 million for the nine months ended December 31, 2023.

Net cash used in operating activities for the three months ended June 30, 2025 was $50.2 million compared to net cash provided by operating activities of $12.3 million for the three months ended June 30, 2024.

This change was primarily due to an increase in purchases of investments.

Purchases of investments were $207.2 million during the nine months ended December 31, 2024, compared to $183.0 million during the nine months ended December 31, 2023.

Aggregate net proceeds from the sale and recapitalization of investments and principal repayments of investments totaled $82.0 million during the nine months ended December 31, 2024, compared to $79.7 million during the nine months ended December 31, 2023.

As of December 31, 2024, we had equity investments in and/or loans to 26 portfolio companies with an aggregate cost basis of $1.0 billion.

As of December 31, 2023, we had equity investments in and/or loans to 25 portfolio companies with an aggregate cost basis of $868.5 million.

The following table summarizes our total portfolio investment activity during the nine months ended December 31, 2024 and 2023:

Nine Months Ended December 31,

Purchases of investments totaled $62.8 million during the three months ended June 30, 2025, compared to $0.6 million during the three months ended June 30, 2024.

Aggregate net proceeds from the principal repayments of investments totaled $4.4 million during the three months ended June 30, 2025, compared to $3.0 million during the three months ended June 30, 2024.

As of June 30, 2025, we had equity investments in and/or loans to 27 portfolio companies with an aggregate cost basis of $1.0 billion.

As of June 30, 2024, we had equity investments in and/or loans to 23 portfolio companies with an aggregate cost basis of $851.9 million.

The following table summarizes our total portfolio investment activity during the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Beginning investment portfolio, at fair value $ 979,320 $ 920,504

4 unchanged sentences

Net realized gain on investments — 2

Net unrealized (depreciation) appreciation of investments 22,299 45,050

Reversal of net unrealized depreciation (appreciation) of investments (38,024) (43,659)

Net unrealized depreciation of investments (1,047) (18,946)

Reversal of net unrealized depreciation of investments — 4

Ending investment portfolio, at fair value $ 1,036,745 $ 899,138

The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of December 31, 2024:

For the remaining three months ending March 31, 2025

The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of June 30, 2025:

For the remaining nine months ending March 31, 2026

For the fiscal years ending March 31:

2 unchanged sentences

Investments in equity securities 278,602

Total cost basis of investments held as of December 31, 2024:

Total cost basis of investments held as of June 30, 2025:

Financing Activities

Net cash provided by financing activities for the nine months ended December 31, 2024 was $96.3 million, which consisted primarily of $126.5 million of gross proceeds from the issuance of our 7.875% 2030 Notes, $24.5 million of net borrowings under the Credit Facility and $2.0 million of proceeds from issuance of common stock, net of expenses and shelf offering registration costs, partially offset by $52.1 million in distributions to common stockholders and $4.6 million of deferred financing and offering costs.

Net cash provided by financing activities for the nine months ended December 31, 2023 was $76.1 million, which consisted primarily of $74.8 million of gross proceeds from the issuance of our 8.00% 2028 Notes, $47.4 million of net borrowings under the Credit Facility and $25.0 million of proceeds from the issuance of common stock, net of expenses and shelf offering registration costs, partially offset by $67.4 million in distributions to common stockholders and $3.7 million of deferred financing and offering costs.

Net cash provided by financing activities for the three months ended June 30, 2025 was $40.4 million, which consisted primarily of $62.0 million of net borrowings under our Credit Facility and $7.3 million of proceeds from issuance of common stock, net of expenses and shelf offering registration costs, partially offset by $28.8 million in distributions to common stockholders and $0.1 million of deferred financing and offering costs.

Net cash used in financing activities for the three months ended June 30, 2024 was $12.4 million, which consisted primarily of $8.8 million in distributions to common stockholders, $3.3 million of net repayments under our Credit Facility and $0.2 million of deferred financing and offering costs.

Distributions and Dividends to Stockholders

1 unchanged sentence

To qualify to be taxed as a RIC and thus avoid corporate level federal income tax on the income we distribute to our stockholders, we are required, among other requirements, to distribute to our stockholders on an annual basis 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”), determined without regard to the dividends paid deduction.

Additionally, the Credit Facility generally restricts the amount of distributions to stockholders that we can pay out to be no greater than the sum of certain amounts, including our net investment income, plus net capital gains, plus amounts elected by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code.

In accordance with these requirements, our Board of Directors declared, and we paid, monthly cash distributions of $0.08 per common share for each of the nine months from April through December 2024, and a supplemental distribution of $0.70 per common share paid in October 2024.

See also “ Recent Developments - Distributions and Dividends ” for a discussion of cash distributions to common stockholders declared and paid by our Board of Directors in January 2025.

Additionally, our Credit Facility generally restricts the amount of distributions to stockholders that we can pay out to be no greater than the sum of certain amounts, including our net investment income, plus net capital gains, plus amounts elected by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code.

In accordance with these requirements, our Board of Directors declared, and we paid, monthly cash distributions of $0.08 per common share for each of the three months from April through June 2025, and a supplemental distribution of $0.54 per common share paid in June 2025.

See also “ Recent Developments - Distributions and Dividends ” for a discussion of cash distributions to common stockholders declared our Board of Directors in July 2025.

For the fiscal year ended March 31, 2025, Investment Company Taxable Income exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $36.7 million of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year.

In addition, for the fiscal year ended March 31, 2025, net capital gains exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $18.7 million of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year.

For the year ended March 31, 2024, we recorded $0.8 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Overdistributed net investment income and decreased Accumulated net realized gain in excess of distributions and Capital in excess of par value.

For the nine months ended December 31, 2024, we recorded $1.2 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Overdistributed net investment income and Accumulated net realized gain in excess of distributions and decreased Capital in excess of par value .

For the year ended March 31, 2025, we recorded $1.2 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and Overdistributed net investment income.

For the three months ended June 30, 2025, we recorded $0.3 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Accumulated net realized (loss) gain in excess of distributions and Capital in excess of par value and increased Overdistributed net investment income.

Dividend Reinvestment Plan

12 unchanged sentences

The registration statement permits us to issue, through one or more transactions, up to an aggregate of $450.0 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 the date of this report, we have the ability to issue up to $321.5 million of the securities registered under the registration statement.

As of the date of this report, we have the ability to issue up to an additional $301.8 million of the securities registered under the registration statement.

In May 2024, we entered into equity distribution agreements with Oppenheimer & Co., B.

Riley Securities, Inc.

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 $75.0 million in the 2024 Common Stock ATM Program.

As of December 31, 2024, we had remaining capacity to sell up to an additional $73.0 million of common stock under the 2024 Common Stock ATM Program.

and Virtu Americas LLC (collectively, the “Sales Agents”), under which we have the ability to issue and sell shares of our common stock, from time to time, through the Sales Agents, having an aggregate offering price of up to $75.0 million in the 2024 Common Stock ATM Program.

In June 2025, we entered into an equity distribution agreement with M&T Securities, Inc.

and entered into amendments to the agreements with Oppenheimer & Co.

Riley Securities, Inc.

and Virtu Americas LLC to add M&T Securities, Inc.

as a Sales Agent for the 2024 Common Stock ATM Program.

As of June 30, 2025, we had remaining capacity to sell up to an additional $65.6 million of common stock under the 2024 Common Stock ATM Program.

In August 2022, we entered into equity distribution agreements with Oppenheimer & Co.

6 unchanged sentences

as a 2022 Sales Agent for the 2022 Common Stock ATM Program.

The 2022 Common Stock ATM Program terminated in connection with our entry into the 2024 Common Stock ATM Program.

During the three and nine months ended December 31, 2024, we sold 148,714 shares of our common stock under the 2024 Common Stock ATM Program, with a weighted-average gross price of $13.64 per share and a weighted-average net price of $13.48 per share after deducting commissions and offering costs borne by us, raising approximately $2.0 million and $2.0 million of gross and net proceeds, respectively.

All of these sales were above our then current estimated NAV per share.

During the three months ended December 31, 2023, we sold 1,456,279 shares of common stock under the 2022 Common Stock ATM Program, with a weighted-average gross price of $14.51 per share and a weighted-average net price of $14.28 per share after deducting commissions and offering costs borne by us, raising approximately $21.1 million and $20.8 million of gross and net proceeds, respectively.

All of these sales were above our then current estimated NAV per share.

During the nine months ended December 31, 2023, we sold 1,760,449 shares of common stock under the 2022 Common Stock ATM Program, with a weighted-average gross price of $14.34 per share and a weighted-average net price of $14.12 per share after deducting commissions and offering costs borne by us, raising approximately $25.3 million and $24.9 million of gross and net proceeds, respectively.

All of these sales were above our then current estimated NAV per share.

We did not sell any shares under the 2022 Common Stock ATM Program, which terminated in connection with our entry into the 2024 Common Stock ATM Program on May 14, 2024, during the three months ended June 30, 2024.

During the three months ended June 30, 2025, we sold 515,295 shares of our common stock under the 2024 Common Stock ATM Program, with a weighted-average gross price of $14.23 per share and a weighted-average net price of $14.04 per share after deducting commissions and offering costs borne by us, raising approximately $7.3 million and $7.2 million of gross and net proceeds, respectively.

All of these sales were above our then current NAV per share.

During the three months ended June 30, 2024, we did not sell any shares under the 2024 Common Stock ATM Program.

We anticipate issuing equity securities to obtain additional capital in the future.

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Generally, the 1940 Act provides that we may not issue and sell our common stock at a price below our NAV per common share, other than to our then-existing common stockholders pursuant to a rights offering, without first obtaining approval from our stockholders and our independent directors and meeting other stated requirements.

As of December 31, 2024, the closing market price of our common stock was $ 13.25 per share, representing a 0.4 % discount to our NAV per share of $ 13.30 as of December 31, 2024.

As of June 30, 2025, the closing market price of our common stock was $ 14.27 per share, representing a 9.9 % premium to our NAV per share of $ 12.99 as of June 30, 2025.

Revolving Line of Credit

We, through our wholly-owned subsidiary, Business Investment, are party to a Credit Facility with KeyBank, as administrative agent, joint lead arranger and lender, Fifth Third Bank as managing agent, joint lead arranger and lender, the Adviser, as servicer, and certain other lenders party thereto.

As of December 31, 2024, the Credit Facility provided for maximum borrowings of $200.0 million, with a revolving period end date of October 30, 2026 and a maturity date of October 30, 2028.

As of the date of this report, the Credit Facility provides for maximum borrowings of $ 250.0 million.

As of June 30, 2025, our Credit Facility had a total commitment amount of $ 270.0 million with an "accordion" feature that permits us to increase the size of the facility to $ 300.0 million.

The Credit Facility has a revolving period end date of October 30, 2026 and a final maturity date of October 30, 2028 (at which time all principal and interest will be due and payable if the Credit Facility is not extended by the revolving period end date) .

See " Overview - Revolving Line of Credit ".

As of December 31, 2024, advances under the Credit Facility generally bore interest at 30-day Term SOFR, subject to a floor of 0.35 %, with a SOFR credit spread adjustment of 10 basis points, plus a margin of 3.15 % per annum until October 30, 2026, with the margin then increasing to 3.40 % for the period from October 30, 2026 to October 30, 2027, and increasing further to 3.65 % thereafter.

As of June 30, 2025, advances under the Credit Facility generally bore interest at 30-day Term SOFR, subject to a floor of 0.35 %, with a SOFR credit spread adjustment of 10 basis points, plus a margin of 3.15 % per annum until October 30, 2026, with the margin then increasing to 3.40 % for the period from October 30, 2026 to October 30, 2027, and increasing further to 3.65 % thereafter.

The Credit Facility has an unused commitment fee on the daily unused commitment amount of 0.50 % per annum if the daily unused commitment amount is less than or equal to 50% of the total commitment amount, 0.75 % per annum if the daily unused commitment amount is greater than 50% but less than or equal to 65% of the total commitment amount, and 1.00 % per annum if the daily unused commitment amount is greater than 65% of the total commitment amount.

At December 31, 2024, we had $ 91.5 million of borrowings outstanding on the Credit Facility and as of the date of this report, we had $89.4 million outstanding under the Credit Facility.

Interest is payable monthly during the term of the Credit Facility.

At June 30, 2025, we had $ 62.0 million of borrowings outstanding on the Credit Facility and as of the date of this report, we had $119.2 million outstanding under our Credit Facility.

Interest is payable monthly during the term of our 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.

Our 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.

Among other things, the Credit Facility contains covenants that require Business Investment to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions) and restrict certain material changes to our credit and collection policies without the lenders’ consent.

The Credit Facility also generally seeks to restrict distributions to stockholders to the sum of (i) our net investment income, (ii) net capital gains, and (iii) amounts deemed by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code.

Among other things, our Credit Facility contains covenants that require Business Investment to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions) and restrict certain material changes to our credit and collection policies without the lenders’ consent.

Credit Facility also generally seeks to restrict distributions to stockholders to the sum of (i) our net investment income, (ii) net capital gains, and (iii) amounts deemed by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code.

Loans eligible to be pledged as collateral are subject to certain limitations, including, among other things, restrictions on geographic concentrations, industry concentrations, loan size, payment frequency and status, average life, portfolio company leverage, and lien property.

The Credit Facility also requires Business Investment to comply with other financial and operational covenants, which obligate Business Investment to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of obligors required in the borrowing base.

Additionally, the Credit Facility contains a performance guaranty that requires the Company 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 $ 412.9 million as of December 31, 2024, (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 December 31, 2024, and as defined in the performance guaranty of the Credit Facility, we had a net worth of $ 943.9 million, asset coverage on our senior securities representing indebtedness of 185.9 %, 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 December 31, 2024, we had availability, after adjustments for various constraints based on collateral quality, of $ 108.5 million under the Credit Facility and were in compliance with all covenants under the Credit Facility.

Our Credit Facility also requires Business Investment to comply with other financial and operational covenants, which obligate Business Investment to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of obligors required in the borrowing base.

Additionally, our Credit Facility contains a performance guaranty that requires the Company 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 $ 416.6 million as of June 30, 2025, (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 June 30, 2025, and as defined in the performance guaranty of our Credit Facility, we had a net worth of $ 940.4 million, asset coverage on our senior securities representing indebtedness of 189.8 %, 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 June 30, 2025, we had availability, after adjustments for various constraints based on collateral quality, of $ 208.0 million under our Credit Facility and were in compliance with all covenants under our Credit Facility.

Notes Payable

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The 8.00% 2028 Notes are traded under the ticker symbol “GAINL” on Nasdaq.

The 8.00% 2028 Notes will mature on August 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 August 1, 2025.

The 8.00% 2028 Notes will mature on August 1, 2028 and may be redeemed in whole or in part at any time or from time to time at the Company’s option.

The 8.00% 2028 Notes bear interest at a rate of 8.00% per year (which equates to $6.0 million per year), payable quarterly in arrears.

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Due to the contingent nature of success fees, there are no guarantees that we will be able to collect any or all of these success fees or know the timing of any such collections.

As a result, as of December 31, 2024 and March 31, 2024, we had unrecognized, contractual off-balance sheet success fee receivables of $52.8 million and $44.9 million (or approximately $1.43 and $1.23 per common share), respectively, on our debt investments.

As a result, as of June 30, 2025 and March 31, 2025, we had unrecognized, contractual off-balance sheet success fee receivables of $55.6 million and $52.5 million (or approximately $1.49 and $1.43 per common share), respectively, on our debt investments.

Consistent with GAAP, we have not recognized success fee receivables and related income in our accompanying Consolidated Financial Statements until earned.

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Since these line of credit commitments have expiration dates and we expect many will never be fully drawn, the total line of credit commitment amounts do not necessarily represent future cash requirements.

We estimate the fair value of the combined unused line of credit commitments as of December 31, 2024 to be insignificant.

The following table shows our contractual obligations as of December 31, 2024, at cost:

We estimate the fair value of the combined unused line of credit commitments as of June 30, 2025 to be insignificant.

The following table shows our contractual obligations as of June 30, 2025, at cost:

Payments Due by Period

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Total $ 640,442 $ 162,639 $ 59,125 $ 418,678 $ —

(A) Excludes unused line of credit commitments to our portfolio companies in the aggregate principal of $4.8 million.

(B) Principal balance of borrowings outstanding under the Credit Facility, based on the maturity date following the current contractual revolving period end date.

(C) Includes interest payments due on the Credit Facility, 5.00% 2026 Notes, 4.875% 2028 Notes, 8.00% 2028 Notes and 7.875% 2030 Notes, as applicable.

The amount of interest payments calculated for purposes of this table was based upon rates and outstanding balances as of December 31, 2024.

(A) Excludes unused line of credit commitments to our portfolio companies in the aggregate principal amount of $3.6 million.

(B) Principal balance of borrowings outstanding under our Credit Facility, based on the maturity date following the current contractual revolving period end date.

The amount of interest payments calculated for purposes of this table was based upon rates and outstanding balances as of June 30, 2025.

Critical Accounting Estimates

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The Adviser’s risk rating system covers both qualitative and quantitative aspects of the business and the securities we hold.

The following table reflects risk ratings for all loans in our portfolio as of December 31, 2024 and March 31, 2024:

Rating December 31, 2024 March 31, 2024

The following table reflects risk ratings for all loans in our portfolio as of June 30, 2025 and March 31, 2025:

Rating June 30, 2025 March 31, 2025

Weighted-average

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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 December 31, 2024 and March 31, 2024.

Our capital loss carryforward balance was $0 as of both June 30, 2025 and March 31, 2025.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis