GLADSTONE INVESTMENT CORPORATIONDE 10-Q

ITEM 2. 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”), 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. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such factors include: (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; (3) the loss of one or more of our executive officers, in particular David Gladstone or David D ullum; ( 4) changes in our investment objectives and strategy; (5) availability, terms (including the possibility of interest rate volatility) and deployment of capital; (6) changes in our industry, interest rates, exchange rates, or the general economy, including inflation; (7) our business prospects and the prospects of our portfolio companies; (8) the degree and nature of our competition; (9) changes in governmental regulation, tax rates and similar matters; (10) our ability to exit investments in a timely manner; (11) our ability to maintain our qualification as a regulated investment company (“RIC”) and as a business development company (“BDC”); and (12) those factors described in Item 1A. “Risk Factors” herein and the “Risk Factors” sections of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, filed with the U.S. 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, 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”). Except as required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. 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 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. The following analysis of our financial condition and results of operations should be read in conjunction with our accompanying Consolidated Financial Statements and the notes thereto contained elsewhere in this Quarterly Report and in our Annual Report. Historical financial condition and results of operations and percentage relationships among any amounts in the financial statements are not necessarily indicative of financial condition, results of operations or percentage relationships for any future periods. 44 Table of Contents OVERVIEW General We were incorporated under the General Corporation Law of the State of Delaware on February 18, 2005. We operate as an externally managed, closed-end, non-diversified management investment company and have elected to be treated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). For U.S. federal income tax purposes, we have elected to be treated as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). To continue to qualify as a RIC for U.S. federal income tax purposes and obtain favorable RIC tax treatment, we must meet certain requirements, including certain minimum distribution requirements. We were established for the purpose of investing in debt and equity securities of established private businesses operating in the United States (“U.S.”). 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 our 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. To achieve our objectives, our investment strategy is to invest in several categories of debt and equity securities, with individual investments generally totaling up to $75 million, although investment size may vary depending upon our total assets or available capital at the time of investment. We expect that our investment portfolio over time will consist of approximately 75% in debt investments and 25% in equity investments, at cost. As of September 30, 2025, our investment portfolio was comprised of 71.1% in debt investments and 28.9% 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. that meet certain criteria, including: 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, 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. We seek to avoid investing in high-risk, early-stage enterprises. Our targeted portfolio companies are generally considered too small for the larger capital marketplace. We invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the opportunity. In July 2012, the SEC granted us exemptive orders (collectively, 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. In September 2025, the SEC granted us a new Co-Investment Order that contains a more flexible requirement that allocations be “fair and equitable” to us and that the Adviser consider the interests of us in allocations and which minimizes certain board approval requirements from the prior 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. If we are participating in an investment with one or more co-investors, whether or not an affiliate of ours, our investment is likely to be smaller than if we were investing alone. We are externally managed by the Adviser, an investment adviser registered with the SEC and an affiliate of ours, pursuant to an investment advisory and management agreement (the “Advisory Agreement”). The Adviser manages our investment activities. We have also entered into an administration agreement with Gladstone Administration, LLC, an affiliate of ours and the Adviser, whereby we pay separately for administrative services. Our shares of common stock, our 5.00% Notes due 2026 (“5.00% 2026 Notes”), our 4.875% Notes due 2028 ("4.875% 2028 Notes"), our 8.00% Notes due 2028 (“8.00% 2028 Notes”) and our 7.875% Notes due 2030 (“7.875% 2030 Notes”) are traded on the Nasdaq Global Select Market (“Nasdaq”) under the trading symbols “GAIN,” “GAINN,” “GAINZ,” “GAINL,” and “GAINI,” respectively. 45 Table of Contents Business Portfolio and Investment Activity 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 six months ended September 30, 2025, we invested in three new portfolio companies. From our initial public offering in June 2005 through September 30, 2025, we have invested in 65 companies, excluding investments in syndicated loans, for a total of approximately $2.2 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. Unlike paid-in-kind (“PIK”) income, we generally do not recognize success fees as income until payment has been received. 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 September 30, 2025, we had unrecognized, contractual success fees of $59.3 million, or $1.50 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 September 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. We believe, in aggregate, these transactions were equity-oriented investment successes and exemplify our investment strategy of striving to achieve returns through current income on the debt portion of our investments and capital gains from the equity portion. 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 by 100.0% from March 2011 through September 30, 2025, and allowed us to declare and pay 24 supplemental distributions to common stockholders through September 30, 2025. Capital Raising We have been able to meet our capital needs through extensions of and increases to the Fifth Amended and Restated Credit Agreement dated April 30, 2013, as amended from time to time (the “Credit Facility”), and by accessing the capital markets in the form of public offerings of unsecured notes, as well as common and preferred stock. 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 six months ended September 30, 2025, we sold 2,753,656 shares of our common stock under our "at-the-market" program (the "2024 Common Stock ATM Program") for gross proceeds of approximately $38.9 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 September 30, 2025, the closing market price of our common stock was $ 13.82 per share, representing a 2.1 % premium to our net asset value (“NAV”) of $ 13.53 per share as of September 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. 46 Table of Contents 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. 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 September 30, 2025, our asset coverage ratio on our senior securities representing indebtedness was 193.2%. Investment Highlights Investment Activity During the six months ended September 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 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 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. • In July 2025, we invested $67.6 million in a new portfolio company, Global GRAB Technologies, Inc. ("Global GRAB"), in the form of $46.5 million of secured first lien debt and $21.1 million of preferred equity. Global GRAB, headquartered in Franklin, Tennessee, is a provider of turnkey perimeter security and hostile vehicle mitigation systems, serving various government and commercial organizations. • In September 2025, we entered into a new $20.0 million secured first lien term loan with J.R. Hobbs Co. – Atlanta, LLC ("J.R. Hobbs"), restructuring our previously outstanding first lien term loans and line of credit with an aggregate total cost basis of $49.9 million, which resulted in a realized loss of $29.9 million. Distributions and Dividends • In October 2025, our Board of Directors declared the following monthly cash distributions to common stockholders: Record Date Payment Date Distribution per Common Share October 24, 2025 October 31, 2025 $ 0.08 November 17, 2025 November 26, 2025 0.08 December 22, 2025 December 31, 2025 0.08 Total for the Quarter: $ 0.24 47 Table of Contents RESULTS OF OPERATIONS Comparison of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024 For the Three Months Ended September 30, 2025 2024 Change % Change INVESTMENT INCOME Interest income $ 22,669 $ 20,996 $ 1,673 8.0 % Dividend and success fee income 2,610 1,569 1,041 66.3 % Total investment income 25,279 22,565 2,714 12.0 % EXPENSES Base management fee 5,457 4,447 1,010 22.7 % Loan servicing fee 2,932 2,194 738 33.6 % Incentive fee 5,207 2,232 2,975 133.3 % Administration fee 520 567 (47) (8.3) % Interest expense 9,631 6,399 3,232 50.5 % Amortization of deferred financing costs and discounts 910 629 281 44.7 % Other 913 1,669 (756) (45.3) % Expenses before credits from Adviser 25,570 18,137 7,433 41.0 % Credits to fees from Adviser (4,570) (2,863) (1,707) 59.6 % Total expenses, net of credits to fees 21,000 15,274 5,726 37.5 % NET INVESTMENT INCOME 4,279 7,291 (3,012) (41.3) % REALIZED AND UNREALIZED GAIN (LOSS) Net realized (loss) gain on investments (29,938) 42,303 (72,241) NM Net unrealized appreciation (depreciation) 54,368 (34,112) 88,480 NM Net realized and unrealized gain 24,430 8,191 16,239 NM NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 28,709 $ 15,482 $ 13,227 85.4 % WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING Basic and diluted 38,445,643 36,688,667 1,756,976 4.8 % BASIC AND DILUTED PER COMMON SHARE: Net investment income $ 0.11 $ 0.20 $ (0.09) (45.0) % Net increase in net assets resulting from operations $ 0.75 $ 0.42 $ 0.33 78.6 % NM - Not meaningful 48 Table of Contents Investment Income Total investment income increased $2.7 million, or 12.0%, for the three months ended September 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 $1.7 million, or 8.0%, for the three months ended September 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 September 30, 2025 was $668.9 million, compared to $572.8 million for the prior year period. This increase was primarily due to the origination of $222.9 million of new debt investments and $41.7 million of follow-on debt investments in existing portfolio companies, partially offset by $126.4 million of pay-offs, restructurings, or write-offs of debt investments and $3.8 million of existing loans placed on non-accrual status after June 30, 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 September 30, 2025, we collected $0.3 million in past due interest from J.R. Hobbs that was previously on non-accrual status. We had no collections of past due interest during the three months ended September 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 13.4% for the three months ended September 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 September 30, 2025, our loans to B+T Group Acquisition, Inc. ("B+T"), Diligent Delivery Systems ("Diligent") and Edge Adhesives Holdings, Inc. ("Edge") were on non-accrual status, with an aggregate debt cost basis of $40.3 million. As of September 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 $90.0 million. As of September 30, 2025 and March 31, 2025, SFEG Holdings, Inc. ("SFEG") represented 11.5% and 10.8% of the total investment portfolio at fair value, respectively. Dividend and success fee income for the three months ended September 30, 2025 increased $1.0 million, or 66.3%, from the prior year period. During the three months ended September 30, 2025, dividend and success fee income consisted of $2.6 million of dividend income. During the three months ended September 30, 2024, dividend and success fee income consisted of $1.4 million of dividend income and $0.2 million of success fee income. Expenses Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased $5.7 million, or 37.5%, during the three months ended September 30, 2025, as compared to the prior year period, primarily due to an increase in incentive fees, interest expense and base management fees, partially offset by an increase in fee credits from the Adviser. In accordance with GAAP, during the three months ended September 30, 2025, we recorded a $4.9 million capital gains-based incentive fee compared to a $1.6 million capital gains-based incentive fee during the three months ended September 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. 49 Table of Contents 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 September 30, 2025 2024 Average total assets subject to base management fee (A)(B) $ 1,091,400 $ 889,400 Multiplied by prorated annual base management fee of 2.0% 0.5 % 0.5 % Base management fee (C) $ 5,457 $ 4,447 Credits to fees from Adviser - other (C) (1,638) (669) Net base management fee $ 3,819 $ 3,778 Loan servicing fee (C) $ 2,932 $ 2,194 Credits to base management fee - loan servicing fee (C) (2,932) (2,194) Net loan servicing fee $ — $ — Incentive fee – income-based $ 310 $ 594 Incentive fee – capital gains-based (D) 4,897 1,638 Total incentive fee (C) $ 5,207 $ 2,232 Credits to fees from Adviser - other (C) — — Net total incentive fee $ 5,207 $ 2,232 (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) Excludes our investment in Gladstone Alternative valued at the end of the applicable quarters within the respective periods. (C) Reflected as a line item on our Consolidated Statements of Operations . (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 $3.2 million, or 50.5%, during the three months ended September 30, 2025, as compared to the prior year period, primarily due to the issuance of the 7.785% 2030 Notes in December 2024 and increased borrowings on our Credit Facility, partially offset by a decrease in the effective interest rate. The weighted-average balance outstanding under our Credit Facility during the three months ended September 30, 2025 was $107.6 million, compared to $60.8 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 September 30, 2025 was 8.9%, as compared to 11.0% in the prior year period. The decrease in the effective interest rate on the Credit Facility was primarily a result of lower interest rates on the drawn portion of our Credit Facility, partially offset by an increase in unused commitment fees on the undrawn portion of the Credit Facility during the three months ended September 30, 2025. Other expenses decreased $0.8 million, or 45.3%, during the three months ended September 30, 2025, as compared to the prior year period, due to a decrease in tax expense and bad debt expense. 50 Table of Contents Realized and Unrealized Gain (Loss) The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the three months ended September 30, 2025 and 2024 were as follows: Three Months Ended September 30, 2025 Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss) SFEG Holdings, Inc. $ — $ 20,553 $ — $ 20,553 The E3 Company, LLC — 10,769 — 10,769 Schylling, Inc. — 5,683 — 5,683 Dema/Mai Holding, Inc. — 4,417 — 4,417 Brunswick Bowling Products, Inc. — 3,378 — 3,378 J.R. Hobbs Co. - Atlanta, LLC (29,938) 12,362 19,104 1,528 Ginsey Home Solutions, Inc. — 1,208 — 1,208 Horizon Facilities Services, Inc. — 978 — 978 Phoenix Door Systems, Inc. — (1,026) — (1,026) Pyrotek Special Effects, Inc. — (1,169) — (1,169) Home Concepts Acquisition, Inc. — (1,286) — (1,286) The Maids International, LLC — (1,288) — (1,288) Smart Chemical Solutions, LLC — (1,694) — (1,694) PSI Molded Plastics, Inc. — (2,104) — (2,104) Educators Resource, Inc. — (2,429) — (2,429) Detroit Defense, Inc. — (2,578) — (2,578) Old World Christmas, Inc. — (2,669) — (2,669) Diligent Delivery Systems — (2,707) — (2,707) UPB Acquisition, Inc. — (5,201) — (5,201) Other, net (<$1.0 million, net) — 151 — 151 Total $ (29,938) $ 35,348 $ 19,104 $ 24,514 Three Months Ended September 30, 2024 Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss) Nocturne Luxury Villas, Inc. $ — $ 6,707 $ — $ 6,707 Nth Degree Investment Group, LLC 42,284 — (38,028) 4,256 ImageWorks Display and Marketing Group, Inc. — 3,269 — 3,269 Old World Christmas, Inc. — 3,203 — 3,203 Galaxy Technologies Holding, Inc. — 2,754 — 2,754 Schylling, Inc. — 2,566 — 2,566 The E3 Company, LLC — 2,561 — 2,561 The Maids International, LLC — 1,434 — 1,434 J.R. Hobbs Co. - Atlanta, LLC — 1,150 — 1,150 Phoenix Doors Systems, Inc. — 1,095 — 1,095 Edge Adhesives Holdings, Inc. — (892) — (892) UPB Acquisition, Inc. — (981) — (981) Ginsey Home Solutions, Inc. — (1,090) — (1,090) Brunswick Bowling Products, Inc. — (2,321) — (2,321) B+T Group Acquisition, Inc — (2,839) — (2,839) Horizon Facilities Service, Inc. — (11,752) — (11,752) Other, net (<$1.0 million, net) 19 (948) — (929) Total $ 42,303 $ 3,916 $ (38,028) $ 8,191 51 Table of Contents Net Realized Gain (Loss) on Investments During the three months ended September 30, 2025, we recorded net realized losses on investments of $29.9 million, due to the realized loss from the restructuring of J.R. Hobbs. During the three months ended September 30, 2024, we recorded net realized gains on investments of $42.3 million, due to the realized gain from the exit of Nth Degree Investment Group, LLC ("Nth Degree"). Net Unrealized Appreciation (Depreciation) of Investments Net unrealized appreciation of investments of $54.5 million for the three months ended September 30, 2025 was primarily due to increased performance of certain of our portfolio companies and the reversal of previously recorded unrealized depreciation related to our investment in J.R. Hobbs upon its restructure. These increases were partially offset by decreased performance of certain of our portfolio companies and a decrease in transaction multiples used to estimate the fair value of certain of our portfolio companies. Net unrealized depreciation of investments of $34.1 million for the three months ended September 30, 2024 was primarily due to the reversal of unrealized appreciation of Nth Degree upon our exit, and a decrease in the 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 other portfolio companies. Across our entire investment portfolio, we recorded net unrealized appreciation of $38.8 million on our equity positions and net unrealized appreciation of $15.7 million on our debt investments for the three months ended September 30, 2025 . As of September 30, 2025 , the fair value of our investment portfolio was more than our cost basis by $93.7 million, compared to June 30, 2025, when the fair value of our investment portfolio was more than our cost basis by $39.2 million. This resulted in net unrealized appreciation of $54.5 million for the three months ended September 30, 2025 . Our entire portfolio was fair valued at 109.0% of cost as of September 30, 2025 . 52 Table of Contents Comparison of the Six Months Ended September 30, 2025 to the Six Months Ended September 30, 2024 For the Six Months Ended September 30, 2025 2024 Change % Change INVESTMENT INCOME Interest income $ 44,317 $ 41,621 $ 2,696 6.5 % Dividend and success fee income 4,506 3,122 1,384 44.3 % Total investment income 48,823 44,743 4,080 9.1 % EXPENSES Base management fee 10,537 9,065 1,472 16.2 % Loan servicing fee 5,604 4,416 1,188 26.9 % Incentive fee 4,998 (1,556) 6,554 NM Administration fee 953 1,073 (120) (11.2) % Interest expense 18,130 12,879 5,251 40.8 % Amortization of deferred financing costs and discounts 1,820 1,260 560 44.4 % Other 2,055 3,613 (1,558) (43.1) % Expenses before credits from Adviser 44,097 30,750 13,347 43.4 % Credits to fees from Adviser (8,641) (5,712) (2,929) 51.3 % Total expenses, net of credits to fees 35,456 25,038 10,418 41.6 % NET INVESTMENT INCOME 13,367 19,705 (6,338) (32.2) % REALIZED AND UNREALIZED GAIN (LOSS) Net realized (loss) gain on investments (29,938) 42,305 (72,243) NM Net unrealized appreciation (depreciation) of investments 53,052 (53,054) 106,106 NM Net realized and unrealized gain (loss) 23,114 (10,749) 33,863 NM NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 36,481 $ 8,956 $ 27,525 307.3 % WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING Basic and diluted 37,681,491 36,688,667 992,824 2.7 % BASIC AND DILUTED PER COMMON SHARE: Net investment income $ 0.35 $ 0.54 $ (0.19) (35.2) % Net increase in net assets resulting from operations $ 0.97 $ 0.24 $ 0.73 304.2 % NM = Not Meaningful 53 Table of Contents Investment Income Total investment income increased $4.1 million, or 9.1%, for the six months ended September 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 $2.7 million, or 6.5%, for the six months ended September 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 six months ended September 30, 2025 was $639.6 million, compared to $578.1 million for the prior year period. This increase was primarily due to the origination of $222.9 million of new debt investments and $42.2 million of follow-on debt investments in existing portfolio companies, partially offset by $129.4 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 six months ended September 30, 2025, we collected $1.8 million in past due interest from portfolio companies that were previously on non-accrual status, including $1.5 million from SFEG and $0.3 million from J.R. Hobbs. We had no collections of past due interest during the six months ended September 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 13.7% for the six months ended September 30, 2025, compared to 14.4% 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 September 30, 2025, our loans to B+T, Diligent and Edge were on non-accrual status, with an aggregate debt cost basis of $40.3 million. As of September 30, 2024, our loans to B+T, Diligent, Edge, and J.R. Hobbs were also on non-accrual status, with an aggregate debt cost basis of $90.0 million. As of September 30, 2025 and March 31, 2025, SFEG represented 11.5% and 10.8% of the total investment portfolio at fair value, respectively. Dividend and success fee income for the six months ended September 30, 2025 increased $1.4 million, or 44.3% from the prior year period. During the six months ended September 30, 2025, dividend and success fee income consisted of $3.7 million of dividend income and $0.8 million of success fee income. During the six months ended September 30, 2024, dividend and success fee income consisted of $1.7 million of success fee income and $1.4 million of dividend income. Expenses Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased $10.4 million, or 41.6%, during the six months ended September 30, 2025, as compared to the prior year period, primarily due to an increase in incentive fees, interest expense and base management fee, partially offset by a decrease in other expense and an increase in fee credits from the Adviser. In accordance with GAAP, we recorded a $4.7 million capital gains-based incentive fee during the six months ended September 30, 2025, compared to a $2.2 million reversal of previously accrued capital gains-based incentive fee recorded during the six months ended September 30, 2024. 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 $0.3 million for the six months ended September 30, 2025, as compared to the prior year period, primarily due to an increase in net assets, which drives the hurdle rate. 54 Table of Contents 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: Six Months Ended September 30, 2025 2024 Average total assets subject to base management fee (A) $ 1,053,700 $ 906,500 Multiplied by prorated annual base management fee of 2.0% 1.0 % 1.0 % Base management fee (B) $ 10,537 $ 9,065 Credits to fees from Adviser - other (B) (3,037) (1,296) Net base management fee $ 7,500 $ 7,769 Loan servicing fee (B) $ 5,604 $ 4,416 Credits to base management fee - loan servicing fee (B) (5,604) (4,416) Net loan servicing fee $ — $ — Incentive fee – income-based $ 310 $ 594 Incentive fee – capital gains-based (C) 4,688 (2,150) Total incentive fee (B) $ 4,998 $ (1,556) Credits to fees from Adviser - other (B) — — Net total incentive fee $ 4,998 $ (1,556) (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 increased $5.3 million, or 40.8%, during the six months ended September 30, 2025, as compared to the prior year period, primarily due to interest expense related to the issuance of the 7.785% 2030 Notes in December 2024 and increased borrowings on the Credit Facility, partially offset by a decrease in the effective interest rate. The weighted-average balance outstanding on the Credit Facility during the six months ended September 30, 2025 was $72.2 million as compared to $62.8 million in the prior year period. The effective interest rate on the Credit Facility, excluding the impact of deferred financing costs, during the six months ended September 30, 2025 was 10.2%, as compared to 10.9% in the prior year period. The decrease in the effective interest rate on the Credit Facility was primarily a result of lower interest rates on the drawn portion of our Credit Facility, partially offset by an increase in unused commitment fees on the undrawn portion of the Credit Facility during the six months ended September 30, 2025. Other expenses decreased $1.6 million, or 43.1%, during the six months ended September 30, 2025, as compared to the prior year period, due to an decrease in bad debt expense and tax expense, partially offset by an increase in professional fees. 55 Table of Contents Realized and Unrealized Gain (Loss) The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the six months ended September 30, 2025 and 2024 were as follows: Six Months Ended September 30, 2025 Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss) SFEG Holdings, Inc. $ — $ 25,106 $ — $ 25,106 The E3 Company, LLC — 13,465 — 13,465 J.R. Hobbs Co. - Atlanta, LLC (29,938) 12,873 19,104 2,039 Schylling, Inc. — 8,665 — 8,665 ImageWorks Display and Marketing Group, Inc. — 4,904 — 4,904 Dema/Mai Holding, Inc. — 4,172 — 4,172 Horizon Facilities Services, Inc. — 2,078 — 2,078 Mason West, LLC — 1,834 — 1,834 Nielsen-Kellerman Acquisition Corp. — 1,371 — 1,371 Old World Christmas, Inc. — (1,296) — (1,296) Smart Chemical Solutions, LLC — (1,694) — (1,694) Detroit Defense, Inc. — (1,797) — (1,797) Ginsey Home Solutions, Inc. — (2,260) — (2,260) Diligent Delivery Systems — (2,332) — (2,332) Phoenix Door Systems, Inc. — (2,626) — (2,626) UPB Acquisition, Inc. — (2,706) — (2,706) Brunswick Bowling Products, Inc. — (3,014) — (3,014) Galaxy Technologies Holdings, Inc. — (3,480) — (3,480) The Maids International, LLC — (5,016) — (5,016) Educators Resource, Inc. — (5,734) — (5,734) PSI Molded Plastics, Inc. — (8,238) — (8,238) Other, net (<$1.0 million, net) — 26 — 26 Total $ (29,938) $ 34,301 $ 19,104 $ 23,467 56 Table of Contents Six Months Ended September 30, 2024 Portfolio Company Realized Gain (Loss) Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss) The E3 Company, LLC $ — $ 5,208 $ — $ 5,208 Nocturne Luxury Villas, Inc. — 4,988 — 4,988 Old World Christmas, Inc. — 4,734 — 4,734 Schylling, Inc. — 3,031 — 3,031 UPB Acquisition, Inc — 2,987 — 2,987 Galaxy Technologies Holdings, Inc. — 2,757 — 2,757 Ginsey Home Solutions, Inc. — 2,385 — 2,385 J.R. Hobbs Co. - Atlanta, LLC — 1,349 — 1,349 Dema/Mai Holdings, Inc. — 1,318 — 1,318 The Maids International, LLC — 1,251 — 1,251 Diligent Delivery Systems — (1,092) — (1,092) Home Concepts Acquisition, Inc. — (1,238) — (1,238) PSI Molded Plastics, Inc. — (1,767) — (1,767) Brunswick Bowling Products, Inc. — (2,165) — (2,165) Edge Adhesives Holdings, Inc. — (2,335) — (2,335) B+T Group Acquisition, Inc. — (2,742) — (2,742) Nth Degree Investment Group, LLC 42,284 (7,195) (38,028) (2,939) Horizon Facilities Services, Inc. (8,614) (8,614) Phoenix Door Systems, Inc. (18,163) (18,163) Other, net (<$1.0 million, net) 21 273 4 298 Total $ 42,305 $ (15,030) $ (38,024) $ (10,749) Net Realized Gain (Loss) During the six months ended September 30, 2025, we recorded net realized losses on investments of $29.9 million, due to the realized loss from the restructuring of J.R. Hobbs. During the six months ended September 30, 2024, we recorded net realized gains on investments of $42.3 million, due to the realized gain from the exit of Nth Degree. Net Unrealized Appreciation (Depreciation) on Investments Net unrealized appreciation of investments of $53.4 million for the six months ended September 30, 2025 was primarily due to the increased performance of certain of our portfolio companies and the reversal of previously recorded unrealized depreciation related to our investment in J.R. Hobbs upon its restructure. These increases were partially offset by decreased performance of certain of our portfolio companies and a decrease in transaction multiples used to estimate the fair value of certain of our portfolio companies. Net unrealized depreciation of investments of $53.1 million for the six months ended September 30, 2024 was primarily due to the reversal of unrealized appreciation of Nth Degree upon our 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. Across our entire investment portfolio, we recorded net unrealized appreciation of $36.2 million on our equity positions and appreciation of $17.2 million on our debt positions , for the six months ended September 30, 2025 . As of September 30, 2025 , the fair value of our investment portfolio was more than the cost basis by $93.7 million , as compared to March 31, 2025, when the fair value of our investment portfolio was more than the cost basis by $40.3 million , representing net unrealized appreciation of $53.4 million for the six months ended September 30, 2025 . Our entire portfolio had a fair value of 109.0% of cost as of September 30, 2025 . 57 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Operating Activities Net cash used in operating activities for the six months ended September 30, 2025 was $110.8 million compared to net cash provided by operating activities of $75.5 million for the six months ended September 30, 2024. This change was primarily due to an increase in purchases of investments and decrease in net proceeds from the sale and recapitalization of investments and principal repayments of investments. Purchases of investments totaled $133.9 million during the six months ended September 30, 2025, compared to $20.1 million during the six months ended September 30, 2024. Aggregate net proceeds from the sale and recapitalization of investments and principal repayments of investments totaled $5.8 million during the six months ended September 30, 2025, compared to $76.5 million during the six months ended September 30, 2024. As of September 30, 2025, we had equity investments in and/or loans to 28 portfolio companies with an aggregate cost basis of $1.0 billion. As of September 30, 2024, we had equity investments in and/or loans to 22 portfolio companies with an aggregate cost basis of $840.1 million. The following table summarizes our total portfolio investment activity during the six months ended September 30, 2025 and 2024: Six Months Ended September 30, 2025 2024 Beginning investment portfolio, at fair value $ 979,320 $ 920,504 New investments 129,922 — Disbursements to existing portfolio companies 3,956 20,098 Unscheduled principal repayments (5,806) (28,000) Net proceeds from sale and recapitalization of investments — (48,546) Net realized (loss) gain on investments (29,938) 42,305 Net unrealized appreciation (depreciation) of investments 34,301 (15,030) Reversal of net unrealized depreciation (appreciation) of investments 19,104 (38,024) Ending investment portfolio, at fair value $ 1,130,859 $ 853,307 The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of September 30, 2025: Amount For the remaining six months ending March 31, 2026 $ 15,000 For the fiscal years ending March 31: 2027 61,186 2028 120,282 2029 269,844 2030 159,506 Thereafter 111,680 Total contractual repayments $ 737,498 Investments in equity securities 299,702 Total cost basis of investments held as of September 30, 2025: $ 1,037,200 58 Table of Contents Financing Activities Net cash provided by financing activities for the six months ended September 30, 2025 was $97.9 million, which consisted primarily of $97.7 million of net borrowings under our Credit Facility and $38.4 million of proceeds from issuance of common stock, net of expenses and shelf offering registration costs, partially offset by $38.1 million in distributions to common stockholders and $0.1 million of deferred financing and offering costs. Net cash used in financing activities for the six months ended September 30, 2024 was $76.0 million, which consisted primarily of $58.1 million of net repayments under our Credit Facility, $17.6 million in distributions to common stockholders and $0.3 million of deferred financing and offering costs. Distributions and Dividends to Stockholders Common Stock Distributions 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, 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 six months from April through September 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 October 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, 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 six months ended September 30, 2025, we recorded $2.2 thousand of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Accumulated net realized (loss) gain in excess of distributions and increased Overdistributed net investment income and Capital in excess of par value. Dividend Reinvestment Plan 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 make such election 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 generally 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. 59 Table of Contents Equity Registration Statement On February 28, 2024, we filed a registration statement on Form N-2 (File No. 333-277452), which the SEC declared effective on April 18, 2024. 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 an additional $281.8 million of the securities registered under the registration statement. Common Stock In May 2024, we entered into equity distribution agreements with Oppenheimer & Co., B. Riley Securities, Inc. 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. Inc., B. 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 September 30, 2025, we had remaining capacity to sell up to an additional $34.1 million of common stock under the 2024 Common Stock ATM Program. In August 2022, we entered into equity distribution agreements with Oppenheimer & Co. and Virtu Americas LLC (each a “2022 Sales Agent”), under which we had the ability to issue and sell shares of our common stock, from time to time, through the 2022 Sales Agents, up to an aggregate offering price of $50.0 million in the 2022 Common Stock ATM Program. In August 2023, we entered into an equity distribution agreement with B. Riley Securities, Inc. and entered into amendments to the agreements with Oppenheimer & Co. Inc. and Virtu Americas LLC to add B. Riley Securities, Inc. as a 2022 Sales Agent for the 2022 Common Stock ATM Program. 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 six months ended September 30, 2024. During the three months ended September 30, 2025, we sold 2,238,361 shares of our common stock under the 2024 Common Stock ATM Program, with a weighted-average gross price of $14.10 per share and a weighted-average net price of $13.90 per share after deducting commissions and offering costs borne by us, raising approximately $31.6 million and $31.1 million of gross and net proceeds, respectively. These sales were above our then current NAV per share. During the six months ended September 30, 2025, we sold 2,753,656 shares of our common stock under the 2024 Common Stock ATM Program, with a weighted-average gross price of $14.12 per share and a weighted-average net price of $13.93 per share after deducting commissions and offering costs borne by us, raising approximately $38.9 million and $38.4 million of gross and net proceeds, respectively. These sales were above our then current NAV per share. During the three and six months ended September 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. However, we cannot determine the timing or terms of any future equity issuances or whether we will be able to issue equity on terms favorable to us, or at all. When our common stock is trading at a price below NAV per share, the 1940 Act places regulatory constraints on our ability to obtain additional capital by issuing common stock. 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 September 30, 2025, the closing market price of our common stock was $ 13.82 per share, representing a 2.1 % premium to our NAV per share of $ 13.53 as of September 30, 2025. 60 Table of Contents Revolving Line of Credit As of September 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 September 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 September 30, 2025, we had $ 97.7 million of borrowings outstanding on the Credit Facility and as of the date of this report, we had $95.9 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. 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, 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. Our 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. 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 $ 432.4 million as of September 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 September 30, 2025, and as defined in the performance guaranty of our Credit Facility, we had a net worth of $ 991.8 million, asset coverage on our senior securities representing indebtedness of 193.2 %, 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 September 30, 2025, we had availability, after adjustments for various constraints based on collateral quality, of $ 172.3 million under our Credit Facility and were in compliance with all covenants under our Credit Facility. 61 Table of Contents Notes Payable 5.00% Notes due 2026 In March 2021, we completed a public offering of the 5.00% 2026 Notes with an aggregate principal amount of $127.9 million, which resulted in net proceeds of approximately $123.8 million after deducting underwriting discounts, commissions and offering costs borne by us. The 5.00% 2026 Notes are traded under the ticker symbol “GAINN” on Nasdaq. The 5.00% 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. The 5.00% 2026 Notes bear interest at a rate of 5.00% per year (which equates to $6.4 million per year), payable quarterly in arrears. The indenture relating to the 5.00% 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 5.00% 2026 Notes and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements. The 5.00% 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 the 4.875% 2028 Notes with an aggregate principal amount of $134.6 million, which resulted in net proceeds of approximately $131.3 million after deducting underwriting discounts, commissions and offering costs borne by us. The 4.875% 2028 Notes are traded under the ticker symbol “GAINZ” on Nasdaq. The 4.875% 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. The 4.875% 2028 Notes bear interest at a rate of 4.875% per year (which equates to $6.6 million per year), payable quarterly in arrears. The indenture relating to the 4.875% 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 4.875% 2028 Notes and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements. The 4.875% 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. 62 Table of Contents 8.00% Notes due 2028 In May 2023, we completed a public offering of the 8.00% 2028 Notes with an aggregate principal amount of $74.8 million, which resulted in net proceeds of approximately $72.3 million after deducting underwriting discounts, commissions and offering costs borne by us. 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. 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. The indenture relating to the 8.00% 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 8.00% 2028 Notes and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements. The 8.00% 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 $ 2.5 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 August 1, 2028, the maturity date. 7.875 % Notes due 2030 In December 2024 , we completed a public offering of the 7.875 % 2030 Notes with an aggregate principal amount of $ 126.5 million, which resulted in net proceeds of approximately $ 122.4 million after deducting underwriting discounts, commissions and offering costs borne by us. The 7.875 % 2030 Notes are traded under the ticker symbol “GAINI” on Nasdaq. The 7.875 % 2030 Notes will mature on February 1, 2030 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 February 1, 2027. The 7.875 % 2030 Notes bear interest at a rate of 7.875 % per year (which equates to $10.0 milli on per year), payable quarterly in arrears. The indenture relating to the 7.875 % 2030 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 7.875 % 2030 Notes and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements. The 7.875 % 2030 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 February 1, 2030, the maturity date. OFF-BALANCE SHEET ARRANGEMENTS Unlike PIK income, we generally do not recognize success fees as income until payment has been received. 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 September 30, 2025 and March 31, 2025, we had unrecognized, contractual off-balance sheet success fee receivables of $59.3 million and $52.5 million (or approximately $1.50 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. 63 Table of Contents CONTRACTUAL OBLIGATIONS We have line of credit commitments to certain of our portfolio companies that have not been fully drawn. 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 September 30, 2025 to be insignificant. The following table shows our contractual obligations as of September 30, 2025, at cost: Payments Due by Period Contractual Obligations (A) Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Credit Facility (B) $ 97,700 $ — $ — $ 97,700 $ — Notes payable 463,738 127,938 74,750 261,050 — Interest payments on obligations (C) 111,404 34,853 61,973 14,578 — Total $ 672,842 $ 162,791 $ 136,723 $ 373,328 $ — (A) Excludes unused line of credit commitments to our portfolio companies in the aggregate principal amount of $7.2 million. (B) Principal balance of borrowings outstanding under our Credit Facility, based on the maturity date following the current contractual revolving period end date. (C) Includes interest payments due on our Credit Facility and the Notes, as applicable. The amount of interest payments calculated for purposes of this table was based upon rates and outstanding balances as of September 30, 2025. Critical Accounting Estimates The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported consolidated amounts of assets and liabilities, including disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ materially from those estimates under different assumptions or conditions. We have identified our investment valuation policy (which has been approved by our Board of Directors) as our most critical accounting policy, which is described in Note 2 — Summary of Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements included elsewhere in this Quarterly Report. Additionally, refer to Note 3 — Investments in the accompanying Notes to Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding fair value measurements and our application of Financial Accounting Standards Board Accounting Standards Codification Topic 820, “ Fair Value Measurements and Disclosures.” We have also identified our revenue recognition policy as a critical accounting policy, which is described in Note 2 — Summary of Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements included elsewhere in this Quarterly Report. 64 Table of Contents Investment Valuation Credit Monitoring and Risk Rating The Adviser monitors a wide variety of key credit statistics that provide information regarding our portfolio companies to help us assess credit quality and portfolio performance and, in some instances, are used as inputs in our valuation techniques. Generally, we, through the Adviser, participate in periodic board meetings of our portfolio companies in which we hold board seats and also require them to provide annual audited and monthly unaudited financial statements. Using these statements or comparable information and board discussions, the Adviser calculates and evaluates certain credit statistics. The Adviser risk rates all of our investments in debt securities. The Adviser does not risk rate equity securities. For loans that have been rated by a SEC-registered Nationally Recognized Statistical Rating Organization (“NRSRO”), the Adviser generally uses the average of two corporate level NRSRO’s risk ratings for such security. For all other debt securities, the Adviser uses a proprietary risk rating system. While the Adviser seeks to mirror the NRSRO systems, we cannot provide any assurance that the Adviser’s risk rating system will provide the same risk rating as an NRSRO for these securities. The Adviser’s risk rating system is used to estimate the probability of default on debt securities and the expected loss, if there is a default. The Adviser’s risk rating system uses a scale of 0 to >10, with >10 being the lowest probability of default. It is the Adviser’s understanding that most debt securities of Lower Middle Market companies do not exceed the grade of BBB on an NRSRO scale, so there would be no debt securities in the Lower Middle Market that would meet the definition of AAA, AA or A. Therefore, the Adviser’s scale begins with the designation >10 as the best risk rating which may be equivalent to a BBB from an NRSRO; however, no assurance can be given that a >10 on the Adviser’s scale is equal to a BBB or Baa2 on an NRSRO scale. 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 September 30, 2025 and March 31, 2025: Rating September 30, 2025 March 31, 2025 Highest 10.0 9.0 Average 7.4 7.0 Weighted-average 7.9 7.7 Lowest 4.0 3.0 Tax Status We intend to continue to maintain our qualification as a RIC under Subchapter M of the Code for U.S. federal income tax purposes. As a RIC, we generally are not subject to U.S. 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 distribute to stockholders at least 90% of our Investment Company Taxable Income, determined without regard to the dividends paid deduction. Our policy generally is to make distributions to our stockholders in an amount up to 100% of 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. See “ — Liquidity and Capital Resources — Distributions and Dividends to Stockholders . ” 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. 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. Recent Accounting Pronouncements Refer to Note 2 — Summary of Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements included elsewhere in this Quarterly Report for a description of recent accounting pronouncements. 65 Table of Contents