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, changing interest rates, geopolitical conflicts, 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 D ullum, Erika Highland and Christopher Lee; ( 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 and/or at fair value; (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, 2026, filed with the U.S. Securities and Exchange Commission (“SEC”) on May 12, 2026 (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 in tables, 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. 45 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 70 % in debt investments and 30 % in equity investments, at cost. As of June 30, 2026, our investment portfolio was comprised of 70.6% in debt investments and 29.4% in equity investments, at cost. We focus on investing in lower middle market private businesses (which we generally define as private companies with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $5 million to $25 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, as applicable, 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 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. In September 2025, the SEC granted us our current 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 4.875% Notes due 2028 ("4.875% 2028 Notes"), our 7.875% Notes due 2030 (“7.875% 2030 Notes”) and our 7.125% Notes due 2031 ("7.125% 2031 Notes") are traded on the Nasdaq Global Select Market 46 Table of Contents (“Nasdaq”) under the trading symbols “GAIN,” “GAINZ,” “GAINI,” and "GAING," respectively. Our 6.875% Notes due 2028 ("6.875% 2028 Notes") are not listed. 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. From our initial public offering in June 2005 through June 30, 2026, we have invested in 66 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 June 30, 2026, we had unrecognized, contractual success fees of $63.8 million, or $1.60 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 June 30, 2026, we exited our investments in 33 portfolio companies that we acquired under our buyout strategy. In the aggregate, these sales have generated $353.6 million in net realized gains and $45.4 million in other income upon exit, for a total increase to our net assets of $399.0 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 per common share by 100.0% from March 2011 through June 30, 2026, and allowed us to declare and pay 24 supplemental distributions to common stockholders through June 30, 2026. 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 June 2029, and currently have a total commitment amount of $405.0 million (with a potential total commitment of $500.0 million through additional commitments from new or existing lenders). During the year ended March 31, 2026, we issued the 6.875% 2028 Notes for gross proceeds of $60.0 million, issued the 7.125% 2031 Notes for gross proceeds of $100.0 million and sold 2,984,586 shares of our common stock under our "at-the-market" program (the "Common Stock ATM Program") for gross proceeds of approximately $42.1 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 ” for further discussion of our common stock. Although we have been able to access the capital markets historically, market conditions affect the trading price of our common stock and thus our ability to finance new investments through the issuance of common equity. On June 30, 2026, the closing market price of our common stock was $15.46 per share, representing a 4.8% discount to our net asset value (“NAV”) of $16.24 per share as of June 30, 2026. 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. 47 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 June 30, 2026, our asset coverage ratio on our senior securities representing indebtedness was 208.8%. Investment Highlights Investment Activity During the three months ended June 30, 2026, the following significant transactions occurred: • In June 2026, we entered into a new $3.0 million secured first lien term loan with Home Concepts Acquisition, Inc., restructuring our previously outstanding secured first lien term loan with a cost basis of $12.0 million, which resulted in a realized loss of $9.0 million. • In June 2026, we entered into a definitive agreement to acquire Extrude Hone LLC, a provider of precision surface-finishing solutions used in mission-critical applications, which is expected to close in the second fiscal quarter. Distributions and Dividends • In July 2026, our Board of Directors declared the following monthly cash distributions to common stockholders: Record Date Payment Date Distribution per Common Share July 24, 2026 July 31, 2026 $ 0.08 August 18, 2026 August 31, 2026 0.08 September 21, 2026 September 30, 2026 0.08 Total for the Quarter: $ 0.24 48 Table of Contents RESULTS OF OPERATIONS Comparison of the Three Months Ended June 30, 2026 to the Three Months Ended June 30, 2025 For the Three Months Ended June 30, 2026 2025 Change % Change INVESTMENT INCOME Interest income $ 22,675 $ 21,648 $ 1,027 4.7 % Dividend and success fee income 5,680 1,896 3,784 199.6 % Total investment income 28,355 23,544 4,811 20.4 % EXPENSES Base management fee 6,533 5,080 1,453 28.6 % Loan servicing fee 2,962 2,672 290 10.9 % Incentive fee (5,566) (209) (5,357) NM Administration fee 492 433 59 13.6 % Interest expense on borrowings 9,856 8,499 1,357 16.0 % Amortization of deferred financing costs and discounts 980 910 70 7.7 % Other 1,263 1,142 121 10.6 % Expenses before credits from Adviser 16,520 18,527 (2,007) (10.8) % Credits to fees from Adviser (4,092) (4,071) (21) 0.5 % Total expenses, net of credits to fees 12,428 14,456 (2,028) (14.0) % NET INVESTMENT INCOME 15,927 9,088 6,839 75.3 % REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on investments (9,000) — (9,000) NM Net unrealized depreciation (18,782) (1,316) (17,466) NM Net realized and unrealized loss (27,782) (1,316) (26,466) NM NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (11,855) $ 7,772 $ (19,627) NM WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING Basic and diluted 39,821,967 36,908,943 2,913,024 7.9 % BASIC AND DILUTED PER COMMON SHARE: Net investment income $ 0.40 $ 0.25 $ 0.15 60.0 % Net (decrease) increase in net assets resulting from operations $ (0.30) $ 0.21 $ (0.51) NM NM - Not meaningful 49 Table of Contents Investment Income Total investment income increased $4.8 million, or 20.4%, for the three months ended June 30, 2026, as compared to the prior year period, primarily due to an increase in dividend and success fee income and interest income. Interest income from our investments in debt securities increased $1.0 million, or 4.7%, for the three months ended June 30, 2026, 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 June 30, 2026 was $705.5 million, compared to $610.0 million for the prior year period. The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 12.9% for the three months ended June 30, 2026, compared to 14.1% 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. We had no collections of past due interest during the three months ended June 30, 2026. 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. As of June 30, 2026, our loans on non-accrual status were $40.3 million at cost and $12.2 million at fair value, which represent 5.5% and 1.8% of all debt investments in our portfolio at cost and fair value, respectively. As of June 30, 2025, our loans on non-accrual status were $90.3 million at cost and $51.7 million at fair value, which represent 12.6% and 7.9% of all debt investments in our portfolio at cost and fair value, respectively. As of June 30, 2026 and March 31, 2026, SFEG represented 17.3% and 19.8% of the total investment portfolio at fair value, respectively. Dividend and success fee income for the three months ended June 30, 2026 increased $3.8 million, or 199.6%, from the prior year period. During the three months ended June 30, 2026, dividend and success fee income consisted of $5.6 million of success fee income and $0.1 million of dividend income. 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. Expenses Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, decreased $2.0 million, or 14.0%, during the three months ended June 30, 2026, as compared to the prior year period, primarily due to a decrease in incentive fees, partially offset by an increase in base management fees and interest expense. In accordance with GAAP, during the three months ended June 30, 2026, we recorded a $5.6 million reversal of previously accrued capital gains-based incentive fee compared to a $0.2 million reversal during the three months ended June 30, 2025. The capital gains-based incentive fee is a result of the net impact of net realized gains (losses) and net unrealized appreciation (depreciation) on investments during the respective periods. 50 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 June 30, 2026 2025 Average total assets subject to base management fee (A)(B) $ 1,306,600 $ 1,016,000 Multiplied by prorated annual base management fee of 2.0% 0.5 % 0.5 % Base management fee (C) $ 6,533 $ 5,080 Credits to fees from Adviser - other (C) (1,130) (1,399) Net base management fee $ 5,403 $ 3,681 Loan servicing fee (C) $ 2,962 $ 2,672 Credits to base management fee - loan servicing fee (C) (2,962) (2,672) Net loan servicing fee $ — $ — Incentive fee – income-based $ — $ — Incentive fee – capital gains-based (D) (5,566) (209) Total incentive fee (C) $ (5,566) $ (209) Credits to fees from Adviser - other (C) — — Net total incentive fee $ (5,566) $ (209) (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 accompanying 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 on borrowings increased $1.4 million, or 16.0%, during the three months ended June 30, 2026, as compared to the prior year period, primarily due to increased borrowings on our Credit Facility and the issuance of the 6.875% 2028 Notes in November 2025 and the 7.125% 2031 Notes in February 2026, partially offset by the redemption of the 8.00% 2028 Notes in December 2025, redemption of the 5.00% 2026 Notes in May 2026 and a decrease in the effective interest rate on the Credit Facility. The weighted-average balance outstanding on our Credit Facility during the three months ended June 30, 2026 was $116.7 million, compared to $36.3 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, 2026 was 8.2%, as compared to 14.0% 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 and a decrease in unused commitment fees on the undrawn portion of the Credit Facility during the three months ended June 30, 2026. 51 Table of Contents Realized and Unrealized Gain (Loss) The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the three months ended June 30, 2026 and 2025 were as follows: Three Months Ended June 30, 2026 Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss) Galaxy Technologies Holdings, Inc. $ — $ 9,201 $ — $ 9,201 Diligent Delivery Systems — 3,767 — 3,767 Schylling, Inc. — 3,426 — 3,426 ImageWorks Display and Marketing Group, Inc. — 3,084 — 3,084 UPB Acquisition, Inc. — 2,861 — 2,861 Old World Christmas, Inc. — 2,847 — 2,847 Brunswick Bowling Products, Inc. — 2,558 — 2,558 Pyrotek Special Effects, Inc. — 1,785 — 1,785 Smart Chemical Solutions, LLC — 1,603 — 1,603 Ginsey Home Solutions, Inc. — 1,387 — 1,387 The E3 Company, LLC — 1,376 — 1,376 J.R. Hobbs Co. – Atlanta, LLC — 947 — 947 Mason West, LLC — 812 — 812 Rowan Energy Inc. — (3,431) — (3,431) Global GRAB Technologies, Inc. — (3,887) — (3,887) Dema/Mai Holdings, Inc. — (4,156) — (4,156) Home Concepts Acquisition, Inc. (9,000) 311 3,621 (5,068) Detroit Defense, Inc. — (10,801) — (10,801) SFEG Holdings, Inc. — (36,687) — (36,687) Other, net (<$1.0 million, net) — 548 — 548 Total $ (9,000) $ (22,449) $ 3,621 $ (27,828) 52 Table of Contents 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 SFEG Holdings, Inc. — 4,553 — 4,553 Schylling, Inc. — 2,982 — 2,982 The E3 Company, LLC — 2,696 — 2,696 Mason West, LLC — 2,517 — 2,517 UPB Acquisition, Inc. — 2,495 — 2,495 Old World Christmas, Inc. — 1,373 — 1,373 Home Concepts Acquisition, Inc. — 1,330 — 1,330 Horizon Facilities Services, Inc. — 1,100 — 1,100 Nielsen-Kellerman Acquisition Corp. — 830 — 830 Detroit Defense, Inc. — 781 — 781 Pyrotek Special Effects, Inc. — 647 — 647 Phoenix Door Systems, Inc. — (1,600) — (1,600) Educators Resource, Inc. — (3,304) — (3,304) Ginsey Home Solutions, Inc. — (3,468) — (3,468) Galaxy Technologies Holdings, Inc. — (3,480) — (3,480) The Maids International, LLC — (3,728) — (3,728) PSI Molded Plastics, Inc. — (6,134) — (6,134) Brunswick Bowling Products, Inc. — (6,392) — (6,392) Other, net (<$1.0 million, net) — 489 — 489 Total $ — $ (1,047) $ — $ (1,047) Net Realized Gain (Loss) on Investments During the three months ended June 30, 2026, we recorded net realized losses on investments of $9.0 million, due to the realized loss from the restructuring of Home Concepts Acquisition, Inc. During the three months ended June 30, 2025, we did not record any net realized gains or losses on investments. Net Unrealized Appreciation (Depreciation) on Investments Net unrealized depreciation on investments of $18.8 million for the three months ended June 30, 2026 was primarily due to the decreased performance of certain of our portfolio companies. These decreases were partially offset by increased performance of certain of our portfolio companies and changes in economic conditions that led to an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies. Net unrealized depreciation on 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 changes in economic conditions that led to an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies. Across our entire investment portfolio, we recorded net unrealized depreciation of $24.8 million on our equity investments and net unrealized appreciation of $6.0 million on our debt investments for the three months ended June 30, 2026 . As of June 30, 2026 , the fair value of our investment portfolio exceeded the cost basis by $237.6 million, compared to March 31, 2026, when the fair value of our investment portfolio exceeded the cost basis by $256.4 million. This resulted in net unrealized depreciation of $18.8 million for the three months ended June 30, 2026 . Our entire portfolio had a fair value of 122.7% of cost as of June 30, 2026 . 53 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Operating Activities Net cash provided by operating activities for the three months ended June 30, 2026 was $8.1 million compared to net cash used in operating activities of $50.2 million for the three months ended June 30, 2025. This change was primarily due to a decrease in purchases of investments. Purchases of investments totaled $0.6 million during the three months ended June 30, 2026, compared to $62.8 million during the three months ended June 30, 2025. There were no aggregate net proceeds from the sale and recapitalization of investments and principal repayments of investments during the three months ended June 30, 2026, compared to $4.4 million during the three months ended June 30, 2025. As of June 30, 2026, we had equity investments in and/or loans to 29 portfolio companies with an aggregate cost basis of $1.0 billion. 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. The following table summarizes our total portfolio investment activity during the three months ended June 30, 2026 and 2025: Three Months Ended June 30, 2026 2025 Beginning investment portfolio, at fair value $ 1,309,248 $ 979,320 New investments — 62,322 Disbursements to existing portfolio companies 600 520 Unscheduled principal repayments — (4,370) Net proceeds from sale and recapitalization of investments — — Net realized loss on investments (9,000) — Net unrealized depreciation of investments (22,449) (1,047) Reversal of net unrealized depreciation of investments 3,621 — Ending investment portfolio, at fair value $ 1,282,020 $ 1,036,745 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, 2026: Amount For the remaining nine months ending March 31, 2027 $ 40,340 For the fiscal years ending March 31: 2028 111,442 2029 288,690 2030 159,506 2031 137,470 Thereafter — Total contractual repayments $ 737,448 Investments in equity securities 307,000 Total cost basis of investments held as of June 30, 2026: $ 1,044,448 Financing Activities Net cash used in financing activities for the three months ended June 30, 2026 was $6.9 million, which consisted primarily of the $127.9 million redemption of our 5.00% 2026 Notes, $9.6 million in distributions to common stockholders and $3.1 million of deferred financing costs, partially offset by $133.7 million of net borrowings under our Credit Facility. 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 costs. 54 Table of Contents 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 three months from April through June 2026. See also “ Investment Highlights - Distributions and Dividends ” for a discussion of cash distributions to common stockholders declared by our Board of Directors in July 2026. For the fiscal year ended March 31, 2026, Investment Company Taxable Income exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $21.3 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 ending March 31, 2027, the net capital loss carryforward balance was $17.3 million and no distributions paid will be treated as having been paid in the fiscal year ended March 31, 2026. For the year ended March 31, 2026, we recorded $0.3 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Total distributable earnings and decreased Capital in excess of par value. For the three months ended June 30, 2026, we recorded $0.3 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Total distributable earnings and decreased 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. 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 June 30, 2026, we have the ability to issue up to an additional $119.3 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 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 55 Table of Contents LLC to add M&T Securities, Inc. as a Sales Agent for the Common Stock ATM Program. As of June 30, 2026, we had remaining capacity to sell up to an additional $30.8 million of common stock under the Common Stock ATM Program. During the three months ended June 30, 2026, we did not sell any shares under the Common Stock ATM Program. During the three months ended June 30, 2025, we sold 515,295 shares of our common stock under the 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. These sales were above our then current NAV per share. 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 June 30, 2026, the closing market price of our common stock was $15.46 per share, representing a 4.8% discount to our NAV per share of $16.24 as of June 30, 2026. Revolving Line of Credit We, through our wholly-owned subsidiary, Business Investment, have entered into the Credit Facility with KeyBank, as administrative agent, joint lead arranger and lender, Fifth Third Bank as managing agent, joint lead arranger and lender, City National Bank, as joint lead arranger and lender, the Adviser, as servicer, and certain other lenders party thereto. As of June 30, 2026, the Credit Facility had a total commitment amount of $405.0 million with an "accordion" feature that permits us to increase the size of the facility to $500.0 million. The Credit Facility includes customary terms, covenants, events of default and constraints on borrowing availability based on collateral tests for a credit facility of its size and nature. The Credit Facility has a revolving period end date of June 8, 2029 and a final maturity date of June 8, 2031 (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). As of June 30, 2026, advances under the Credit Facility generally bore interest at 30-day Term SOFR, subject to a floor of 0.35%, plus a margin of 2.85% per annum until June 8, 2029, with the margin then increasing to 3.10% for the period from June 8, 2029 to June 8, 2030, and increasing further to 3.35% thereafter. The Credit Facility has an unused commitment fee on the daily unused commitment amount of 0.50% per annum if the 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 June 30, 2026, we had $157.6 million of borrowings outstanding on the Credit Facility and as of the date of this report, we had $223.8 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 56 Table of Contents 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 $500.0 million or $500.0 million plus 50% of all equity and subordinated debt raised, minus 50% of any equity or subordinated debt redeemed or retired after June 10, 2026, which equated to $0 as of June 30, 2026, (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, 2026, and as defined in the performance guaranty of our Credit Facility, we had a net worth of $1.1 billion, asset coverage on our senior securities representing indebtedness of 208.8%, 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, 2026, we had availability, after adjustments for various constraints based on collateral quality, of $163.2 million under our Credit Facility and were in compliance with all covenants under our Credit Facility. 57 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. On May 1, 2026, we repaid the 5.00% 2026 Notes with an aggregate principal amount outstanding of $127.9 million at maturity. 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. 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. 58 Table of Contents 6.875% Notes due 2028 In November 2025 , we completed an offering of the 6.875% 2028 Notes with an aggregate principal amount of $60.0 million, which resulted in net proceeds of approximately $58.8 million after deducting underwriting discounts, commissions and offering costs borne by us. The 6.875% 2028 Notes will mature on November 1, 2028 and may be redeemed in whole or in part at any time prior to August 1, 2028 at par plus a "make-whole" premium and thereafter at par plus accrued and unpaid interest thereon to the redemption date. The 6.875% 2028 Notes bear interest at a rate of 6.875% per year (which equates to $4.1 milli on per year), payable semi-annually in arrears. The indenture relating to the 6.875% 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 6.875% 2028 Notes and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements. The 6.875% 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 $1.2 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. 7.125 % Notes due 2031 In February 2026 , we completed a public offering of the 7.125 % 2031 Notes with an aggregate principal amount of $ 100.0 million, which resulted in net proceeds of approximately $ 96.9 million after deducting underwriting discounts, commissions and offering costs borne by us. The 7.125 % 2031 Notes are traded under the ticker symbol “GAING” on Nasdaq. The 7.125 % 2031 Notes will mature on May 1, 2031 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after May 1, 2028. The 7.125 % 2031 Notes bear interest at a rate of 7.125 % per year (which equates to $7.1 milli on per year), payable quarterly in arrears. The indenture relating to the 7.125 % 2031 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 7.125 % 2031 Notes and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements. The 7.125 % 2031 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 $ 3.1 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, 2031, 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 June 30, 2026 and March 31, 2026, we had unrecognized, contractual off-balance sheet success fee receivables of $63.8 million and $65.4 million (or approximately $1.60 and $1.64 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. 59 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 June 30, 2026 to be insignificant. The following table shows our contractual obligations as of June 30, 2026, 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) $ 157,600 $ — $ 157,600 $ — $ — Notes payable 421,050 — 194,550 226,500 — Interest payments on obligations (C) 156,911 40,042 73,019 43,850 — Total $ 735,561 $ 40,042 $ 425,169 $ 270,350 $ — (A) Excludes unused line of credit commitments to our portfolio companies, of which there are no unused line of credit commitments. (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 June 30, 2026. 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 critical accounting estimate, 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 Measurement.” Our accounting estimate on the fair value of our investments is critical because the determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of these valuations, and any change in these valuations, on the consolidated financial statements. 60 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 June 30, 2026 and March 31, 2026: Rating June 30, 2026 March 31, 2026 Highest 10.0 10.0 Average 7.0 7.2 Weighted-average 7.2 7.6 Lowest 4.0 4.0 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. 61 Table of Contents