{"url_path":"/sec/gainz/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-12","source_url":"https://www.sec.gov/Archives/edgar/data/1321741/0001321741-26-000011-index.html","accession_number":"0001321741-26-000011","cik":"0001321741","ticker":"GAINZ","issuer_name":"GLADSTONE INVESTMENT CORPORATION\\DE","edgar_url":"https://www.sec.gov/Archives/edgar/data/1321741/0001321741-26-000011-index.html","primary_entity_key":"0001321741","primary_entity_name":"GLADSTONE INVESTMENT CORPORATION\\DE"},"word_count":9953,"has_tables":true,"body_markdown":"ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS\n\nThe 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 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. Except per share amounts, dollar amounts in tables included herein are in thousands unless otherwise indicated.\n\nOVERVIEW\n\nGeneral\n\nWe 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 1940 Act. For U.S. federal income tax purposes, we have elected to be treated as a RIC under Subchapter M of 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.\n\nWe were established for the purpose of investing in debt and equity securities of established private businesses operating in the 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 March 31, 2026, our investment portfolio was comprised of 70.8% in debt investments and 29.2% in equity investments, at cost.\n\nWe focus on investing in Lower Middle Market businesses 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.\n\nWe invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the opportunity, and have opportunistically made several co-investments with Gladstone Capital and Gladstone Alternative pursuant to the Co-Investment Order. We believe the Co-Investment Order has enhanced and will continue to enhance our ability to further our investment objectives and strategies. 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.\n\n53\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nBusiness\n\nPortfolio and Investment Activity\n\nWhile 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 year ended March 31, 2026, we invested in four new portfolio companies. From our initial public offering in June 2005 through March 31, 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.\n\nThe majority of the debt securities in our portfolio have a success fee component, which enhances the yield on our debt investments. 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 March 31, 2026, we had unrecognized, contractual success fees of $65.4 million, or $1.64 per common share. Consistent with GAAP, we generally have not recognized success fee receivables and related income in our accompanying Consolidated Financial Statements until earned.\n\nFrom inception through March 31, 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 March 31, 2026 and allowed us to declare and pay 24 supplemental distributions to common stockholders through March 31, 2026.\n\nCapital Raising\n\nWe have been able to meet our capital needs through extensions of and increases to 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 $300.0 million. 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 \"2024 Common Stock ATM Program\") for gross proceeds of approximately $42.1 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.\n\nAlthough 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 March 31, 2026, the closing market price of our common stock was $14.20 per share, representing a 15.4% discount to our NAV of $16.78 per share as of March 31, 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.\n\nRegulatory Compliance\n\nOur 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.\n\n54\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nOn 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.\n\nAs of March 31, 2026, our asset coverage ratio on our senior securities representing indebtedness was 213.8%.\n\nInvestment Highlights\n\nInvestment Activity\n\nDuring the fiscal year ended March 31, 2026, the following significant transactions occurred:\n\n•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.\n\n•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.\n\n•In June 2025, we restructured our investment in PSI Molded Plastics, Inc. (\"PSI Molded\"). As a result of the restructuring, we converted debt with a cost basis of $10.6 million into preferred equity.\n\n•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.\n\n•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.\n\n•In December 2025, we invested $33.1 million in a new portfolio company, Rowan Energy Inc. (“Rowan”), in the form of $25.8 million of secured first lien debt and $7.3 million of preferred equity. Rowan, headquartered in Arcadia, Oklahoma, specializes in advanced frac sand filtration, completion-equipment deployment and field-operations support.\n\nRecent Developments\n\nAppointment of Officer\n\nOn March 20, 2026, the Board of Directors appointed David Dullum as the Company’s chief executive officer, effective immediately. On that same date, Erika Highland, who was promoted to executive vice president, was appointed as the Company's president effective October 1, 2026. Additionally, John Sateri was appointed as the Company's chief investment officer effective immediately.\n\n55\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nDistributions and Dividends\n\nIn April 2026, our Board of Directors declared the following monthly cash distributions to common stockholders:\n\nRecord DatePayment DateDistribution per Common Share\n\nApril 24, 2026April 30, 2026$0.08 \n\nMay 20, 2026May 29, 20260.08 \n\nJune 23, 2026June 30, 20260.08 \n\nTotal for the Quarter:$0.24 \n\nNotes Payable\n\nOn May 1, 2026, we repaid the 5.00% 2026 Notes with an aggregate principal amount outstanding of $127.9 million.\n\n56\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nRESULTS OF OPERATIONS\n\nComparison of the Fiscal Year Ended March 31, 2026 to the Fiscal Year Ended March 31, 2025\n\nFor the Fiscal Years Ended March 31,\n\n20262025$ Change% Change\n\nINVESTMENT INCOME\n\nInterest income$89,741 $83,612 $6,129 7.3 %\n\nDividend and success fee income9,336 10,050 (714)(7.1)%\n\nTotal investment income99,077 93,662 5,415 5.8 %\n\nEXPENSES\n\nBase management fee22,824 19,105 3,719 19.5 %\n\nLoan servicing fee11,821 9,636 2,185 22.7 %\n\nIncentive fee38,280 12,265 26,015 212.1 %\n\nAdministration fee1,959 1,914 45 2.4 %\n\nInterest expense on borrowings37,140 28,246 8,894 31.5 %\n\nAmortization of deferred financing costs and discounts3,881 2,852 1,029 36.1 %\n\nOther4,178 6,294 (2,116)(33.6)%\n\nExpenses before credits from Adviser120,083 80,312 39,771 49.5 %\n\nCredits to fees from Adviser(17,254)(14,745)(2,509)17.0 %\n\nTotal expenses, net of credits to fees102,829 65,567 37,262 56.8 %\n\nNET INVESTMENT (LOSS) INCOME(3,752)28,095 (31,847)NM\n\nREALIZED AND UNREALIZED GAIN (LOSS), NET OF TAXES\n\nNet realized (loss) gain on investments (26,294)63,184 (89,478)NM\n\nNet realized loss on other\n(1,301)— (1,301)NM\n\nNet unrealized appreciation (depreciation) of investments216,146 (25,960)242,106 NM\n\nNet unrealized appreciation of other(46)— (46)NM\n\nNet realized and unrealized gain188,505 37,224 151,281 406.4 %\n\nNET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS$184,753 $65,319 $119,434 182.8 %\n\nWEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING\n\nBasic and diluted38,712,611 36,735,218 1,977,393 5.4 %\n\nBASIC AND DILUTED PER COMMON SHARE:\n\nNet investment (loss) income$(0.10)$0.76 $(0.86)NM\n\nNet increase in net assets resulting from operations$4.77 $1.78 $2.99 168.0 %\n\nNM = Not Meaningful\n\n57\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nInvestment Income\n\nTotal investment income increased $5.4 million, or 5.8%, for the year ended March 31, 2026, as compared to the prior year. This increase was primarily due to an increase in interest income, partially offset by a decrease in dividend and success fee income.\n\nInterest income from our investments in debt securities increased $6.1 million, or 7.3%, for the year ended March 31, 2026, as compared to the prior year. 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.\n\nThe weighted-average principal balance of our interest-bearing investment portfolio during the year ended March 31, 2026 was $671.6 million, compared to $601.5 million during the prior year. This increase was primarily due to the origination of $250.5 million of new debt investments, $47.0 million of follow-on debt investments in existing portfolio companies and $20.0 million of loans returned to accrual status, partially offset by the pay-off, restructuring, or write-off of $153.5 million 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 year ended March 31, 2026, 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 Holdings, Inc. (\"SFEG\") and $0.3 million from J.R. Hobbs. We had no collections of past due interest during the year ended March 31, 2025.\n\nThe weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 13.3% and 13.9% for the years ended March 31, 2026 and 2025, respectively. 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.\n\nAs of March 31, 2026, 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 March 31, 2025, our loans to B+T, Diligent, Edge and J.R. Hobbs were on non-accrual status, with an aggregate debt cost basis of $90.2 million.\n\nDividend and success fee income for the year ended March 31, 2026 decreased $0.7 million, or 7.1%, as compared to the prior year. During the year ended March 31, 2026, dividend and success fee income consisted of $6.1 million of dividend income and $3.2 million of success fee income. During the year ended March 31, 2025, dividend and success fee income consisted of $6.8 million of success fee income and $3.3 million of dividend income.\n\nAs of March 31, 2026 and 2025, SFEG represented 19.8% and 10.8% of the total investment portfolio at fair value, respectively.\n\nExpenses\n\nTotal expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased $37.3 million, or 56.8%, for the year ended March 31, 2026, as compared to the prior year, primarily due to increases in incentive fees, interest expense and base management fee, partially offset by a decrease in other expenses.\n\nIn accordance with GAAP, we recorded a capital gains-based incentive fee of $38.0 million during the year ended March 31, 2026, compared to a capital gains-based incentive fee of $7.4 million during the year ended March 31, 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. The income-based incentive fee for the year ended March 31, 2026 decreased $4.5 million, or 93.6%, as compared to the prior year, due to the increase in net assets, which drives the hurdle rate, and a decrease in pre-incentive fee net investment income.\n\nBase management fee for the year ended March 31, 2026 increased $3.7 million, or 19.5%, as compared to the prior year, primarily due to the increase in the average total assets subject to the base management fee as a result of a net increase in the fair value of investments and an increase in additional investments at cost.\n\n58\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nThe 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:\n\nYear Ended March 31,\n\n20262025\n\nAverage total assets subject to base management fee(A)(B)\n$1,141,200 $955,250 \n\nMultiplied by annual base management fee of 2.0%\n2.0 %2.0 %\n\nBase management fee(C)\n22,824 19,105 \n\nCredits to fees from Adviser - other(C)\n(5,433)(5,109)\n\nNet base management fee\n$17,391 $13,996 \n\nLoan servicing fee(C)\n$11,821 $9,636 \n\nCredits to base management fee - loan servicing fee(C)\n(11,821)(9,636)\n\nNet loan servicing fee$— $— \n\nIncentive fee – income-based$310 $4,820 \n\nIncentive fee – capital gains-based(D)\n37,970 7,445 \n\nTotal incentive fee(C)\n38,280 12,265 \n\nCredits to fees from Adviser - other(C)\n— — \n\nNet total incentive fee$38,280 $12,265 \n\n(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.\n\n(B)Excludes our investment in Gladstone Alternative valued at the end of the applicable quarters within the respective periods.\n\n(C)Reflected as a line item on our accompanying Consolidated Statements of Operations.\n\n(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.\n\nInterest expense on borrowings increased $8.9 million, or 31.5%, during the year ended March 31, 2026, as compared to the prior year, primarily due to interest expense related to the issuance of the 7.875% 2030 Notes in December 2024, the 6.875% 2028 Notes in November 2025 and the 7.125% 2031 Notes in February 2026 and increased borrowings on the Credit Facility, partially offset by a decrease in the effective interest rate and the redemption of the 8.00% 2028 Notes in December 2025. The weighted-average balance outstanding on our Credit Facility during the year ended March 31, 2026 was $76.2 million, as compared to $60.3 million in the prior year. The effective interest rate on our Credit Facility, excluding the impact of deferred financing costs, during the year ended March 31, 2026 was 9.9%, as compared to 10.6% in the prior year. This decrease in the effective interest rate on our Credit Facility was primarily a result of a decrease in interest rates on the drawn portion of our Credit Facility, partially offset by an increase in unused commitment fees due to the increased facility size during the year.\n\nOther expenses decreased $2.1 million, or 33.6%, during the year ended March 31, 2026, as compared to the prior year, primarily due to a decrease in bad debt expense and tax expense, partially offset by an increase in professional fees.\n\n59\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nRealized and Unrealized Gain (Loss)\n\nThe realized gains (losses) and unrealized appreciation (depreciation) across our investments for the years ended March 31, 2026 and 2025 were as follows:\n\nYear Ended March 31, 2026\n\nPortfolio CompanyRealized\nGain (Loss) on InvestmentsUnrealized\nAppreciation\n(Depreciation)Reversal of\nUnrealized\n(Appreciation)\nDepreciationNet Gain\n(Loss)\n\nSFEG Holdings, Inc.$— $153,260 $— $153,260 \n\nSchylling, Inc.— 45,804 — 45,804 \n\nThe E3 Company, LLC— 22,731 — 22,731 \n\nImageWorks Display and Marketing Group, Inc.— 17,532 — 17,532 \n\nOld World Christmas, Inc.3,481 6,191 — 9,672 \n\nMason West, LLC— 5,973 — 5,973 \n\nGlobal GRAB Technologies, Inc.— 3,922 — 3,922 \n\nGinsey Home Solutions, Inc.— 3,188 — 3,188 \n\nJ.R. Hobbs Co. - Atlanta, LLC(29,938)9,747 19,104 (1,087)\n\nBrunswick Bowling Products, Inc.— (2,061)— (2,061)\n\nThe Maids International, LLC— (3,779)— (3,779)\n\nDetroit Defense, Inc.— (4,817)— (4,817)\n\nPyrotek Special Effects, Inc.— (5,425)— (5,425)\n\nSmart Chemical Solutions, LLC— (6,516)— (6,516)\n\nPSI Molded Plastics, Inc.— (6,684)— (6,684)\n\nNielsen-Kellerman Acquisition Corp.— (7,780)— (7,780)\n\nEducators Resource, Inc.— (9,871)— (9,871)\n\nDiligent Delivery Systems— (12,112)— (12,112)\n\nHorizon Facilities Services, Inc.— (13,088)— (13,088)\n\nOther, net (<$1.0 million, net )163 827 — 990 \n\nTotal$(26,294)$197,042 $19,104 $189,852 \n\n60\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nYear Ended March 31, 2025\n\nPortfolio CompanyRealized\nGain (Loss) on InvestmentsUnrealized\nAppreciation\n(Depreciation)Reversal of\nUnrealized\n(Appreciation)\nDepreciationNet Gain\n(Loss)\n\nThe E3 Company, LLC$— $19,418 $— $19,418 \n\nNocturne Luxury Villas, Inc.19,790 18,668 (24,334)14,124 \n\nUPB Acquisition, Inc.— 13,723 — 13,723 \n\nSFEG Holdings, Inc.— 12,652 — 12,652 \n\nImageWorks Display and Marketing Group, Inc.— 10,314 — 10,314 \n\nSchylling, Inc.— 9,230 — 9,230 \n\nDema/Mai Holdings, Inc.— 8,889 — 8,889 \n\nGinsey Home Solutions, Inc.— 8,178 — 8,178 \n\nJ.R. Hobbs Co. - Atlanta, LLC— 3,532 — 3,532 \n\nBrunswick Bowling Products, Inc.— 3,118 — 3,118 \n\nThe Maids International, LLC— 2,984 — 2,984 \n\nB+T Group Acquisition, Inc.— (1,691)— (1,691)\n\nNth Degree Investment Group, LLC43,373 (7,195)(38,028)(1,850)\n\nEdge Adhesives Holdings, Inc.— (2,562)— (2,562)\n\nHome Concepts Acquisition, Inc.— (3,957)— (3,957)\n\nMason West, LLC— (6,497)— (6,497)\n\nOld World Christmas, Inc.— (7,099)— (7,099)\n\nEducators Resource, Inc.— (8,137)— (8,137)\n\nPSI Molded Plastics, Inc.— (9,151)— (9,151)\n\nHorizon Facilities Services, Inc.— (28,066)— (28,066)\n\nOther, net (<$1.0 million, net )21 47 4 72 \n\nTotal$63,184 $36,398 $(62,358)$37,224 \n\nNet Realized Gain (Loss) on Investments\n\nDuring the year ended March 31, 2026, we recorded net realized losses on investments of $26.3 million, primarily due to the realized loss from the restructuring of J.R. Hobbs, partially offset by the equity distribution recognized as realized gain from Old World Christmas, Inc.\n\nDuring the year ended March 31, 2025, we recorded net realized gains on investments of $63.2 million, primarily due to a $43.4 million realized gain from the exit of Nth Degree Investment Group, LLC (\"Nth Degree\") and a $19.8 million realized gain from the exit of Nocturne Luxury Villas, Inc. (\"Nocturne\").\n\nNet Realized Gain (Loss) on Other\n\nDuring the year ended March 31, 2026, we recorded net realized losses on other of $1.3 million, due to the unamortized deferred offering costs written off upon the redemption of our 8.00% 2028 Notes. During the year ended March 31, 2025, we did not record any net realized gains or losses on other.\n\nNet Unrealized Appreciation (Depreciation) on Investments\n\nNet unrealized appreciation on investments of $216.1 million for the year ended March 31, 2026 was primarily due to the increased performance of certain of our portfolio companies, an increase in transaction multiples used to estimate the fair value 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.\n\nNet unrealized depreciation on investments of $26.0 million for the year ended March 31, 2025 was primarily due to the reversal of net unrealized appreciation of Nth Degree and Nocturne upon exit and decreased performance of certain of our portfolio companies. These decreases were partially offset by an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies and increased performance of certain of our portfolio companies.\n\n61\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nAcross our entire investment portfolio, we recorded $222.1 million of net unrealized appreciation on our equity investments and $6.0 million of net unrealized depreciation on our debt investments for the year ended March 31, 2026. As of March 31, 2026, the fair value of our investment portfolio exceeded the cost basis by $256.4 million, compared to March 31, 2025, when the fair value of our investment portfolio exceeded the cost basis by $40.3 million. This resulted in net unrealized appreciation of $216.1 million for the year ended March 31, 2026. Our entire portfolio had a fair value of 124.4% of cost as of March 31, 2026.\n\nThe comparison of the fiscal year ended March 31, 2025 to the fiscal year ended March 31, 2024 can be found in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 located within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.\n\nLIQUIDITY AND CAPITAL RESOURCES\n\nOperating Activities\n\nCash inflows from operating activities are primarily generated from cash collections of interest and other income from our portfolio companies, as well as from cash proceeds received from repayments of debt investments and from sales of equity investments. These cash collections are principally used to fund new investments, pay distributions to our common stockholders, make interest payments on our Credit Facility and the Notes, pay management and incentive fees to the Adviser and other operating expenses. We may also use cash inflows from operating activities to repay outstanding borrowings under our Credit Facility.\n\nNet cash used in operating activities for the year ended March 31, 2026 was $101.6 million, as compared to net cash provided by operating activities of $16.3 million for the year ended March 31, 2025. This change was primarily due to a decrease in net proceeds from the sale and recapitalization of investments and principal repayments of investments, partially offset by a decrease in purchases of investments.\n\nPurchases of investments totaled $173.6 million during the year ended March 31, 2026, compared to $221.2 million during the year ended March 31, 2025. Aggregate net proceeds from the sale and recapitalization of investments and principal repayments of investments totaled $33.5 million during the year ended March 31, 2026, compared to $199.6 million during the year ended March 31, 2025.\n\nNet cash provided by operating activities for the year ended March 31, 2025 was $16.3 million, as compared to net cash used in operating activities of $69.9 million for the year ended March 31, 2024. This change was primarily due to increases in principal repayments of investments and the aggregate net proceeds from the sale and recapitalization of investments, partially offset by an increase in purchases of investments.\n\nPurchases of investments totaled $221.2 million during the year ended March 31, 2025, compared to $183.9 million during the year ended March 31, 2024. Net proceeds from the sale and recapitalization of investments and principal repayments totaled $199.6 million during the year ended March 31, 2025, compared to $80.2 million during the year ended March 31, 2024.\n\n62\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nAs of March 31, 2026, we had equity investments in and/or loans to 29 companies with an aggregate cost basis of $1.1 billion. As of March 31, 2025, we had equity investments in and/or loans to 25 companies with an aggregate cost basis of $939.1 million. The following table summarizes our total portfolio investment activity for the years ended March 31, 2026 and 2025:\n\nYears Ended March 31,\n\n20262025\n\nBeginning investment portfolio, at fair value$979,320 $920,504 \n\nNew investments164,810 178,844 \n\nDisbursements to existing portfolio companies8,806 42,373 \n\nUnscheduled principal repayments(29,896)(123,600)\n\nNet proceeds from sale and recapitalization of investments(3,524)(76,025)\n\nNet realized (loss) gain on investments(26,414)63,184 \n\nNet unrealized appreciation of investments197,042 36,398 \n\nReversal of net unrealized depreciation (appreciation) of investments19,104 (62,358)\n\nEnding investment portfolio, at fair value$1,309,248 $979,320 \n\nThe following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of March 31, 2026:\n\nAmount\n\nFor the fiscal years ending March 31:\n\n2027$46,490 \n\n2028110,842 \n\n2029291,540 \n\n2030159,506 \n\n2031137,470 \n\nThereafter— \n\nTotal contractual repayments$745,848 \n\nInvestments in equity securities307,000 \n\nTotal cost basis of investments held as of March 31, 2026:$1,052,848 \n\nFinancing Activities\n\nNet cash provided by financing activities for the year ended March 31, 2026 was $88.8 million, which consisted primarily of $96.9 million of proceeds from the issuance of our 7.125% 2031 Notes, net of deferred offering costs, $58.8 million of proceeds from the issuance of our 6.875% 2028 Notes, net of deferred offering costs, $41.6 million of proceeds from issuance of common stock, net of expenses and shelf offering registration costs, and $23.9 million of net borrowings on our Credit Facility, partially offset by the $74.8 million redemption of our 8.00% 2028 Notes, $57.2 million in distributions to common stockholders, and $0.3 million of deferred financing costs.\n\nNet cash used in financing activities for the year ended March 31, 2025 was $4.4 million, which consisted primarily of $67.0 million of net repayments on our Credit Facility, $61.0 million in distributions to common stockholders, $0.8 million of deferred financing costs, partially offset by $122.4 million of proceeds from the issuance of the 7.875% 2030 Notes, net of deferred offering costs, and $2.0 million of proceeds from the issuance of common stock, net of expenses and shelf offering registration costs.\n\n63\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nDistributions and Dividends to Stockholders\n\nCommon Stock Distributions\n\nTo 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 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 twelve months from April 2025 through March 2026, 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 by our Board of Directors in April 2026.\n\nFor each of the fiscal years ended March 31, 2026 and 2025, 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 and $36.7 million, respectively, of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year. In addition, for the fiscal year ended March 31, 2026, our capital loss carryforward balance was $17.3 million and no distributions paid subsequent to fiscal year-end will be treated as having been paid in the prior year. 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, 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 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 Total distributable earnings.\n\nDividend Reinvestment Plan\n\nOur 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.\n\nRegistration Statement\n\nOn 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 $119.3 million of the securities registered under the registration statement.\n\nOn September 3, 2021, we filed a registration statement on Form N-2 (File No. 333-259302), which the SEC declared effective on October 15, 2021. The registration statement permitted us to issue, through one or more transactions, up to an aggregate of $300.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities, and warrants to purchase common stock, preferred stock, or debt securities, including through concurrent, separate offerings of such securities. This registration statement was terminated on April 18, 2024.\n\n64\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nEquity\n\nCommon Stock\n\nIn 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 March 31, 2026, we had remaining capacity to sell up to an additional $30.8 million of common stock under the 2024 Common Stock ATM Program.\n\nIn 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 year ended March 31, 2025.\n\nDuring the year ended March 31, 2026, we sold 2,984,586 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 $13.92 per share after deducting commissions and offering costs borne by us, raising approximately $42.1 million and $41.5 million of gross and net proceeds, respectively. These sales were above our then current NAV per share.\n\nDuring the year ended March 31, 2025, we sold 148,714 shares of our common stock under the 2024 Common Stock ATM Program, with a weighted-average gross price of $13.64 per share and a weighted-average net price of $13.48 per share after deducting commissions and offering costs borne by us, raising approximately $2.0 million and $2.0 million of gross and net proceeds, respectively. These sales were above our then current NAV per share.\n\nWe 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. On March 31, 2026, the closing market price of our common stock was $14.20 per share, representing a 15.4% discount to our NAV of $16.78 per share as of March 31, 2026.\n\nRevolving Line of Credit\n\nAs of March 31, 2026, our Credit Facility had a total commitment amount of $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). Advances under the Credit Facility generally bear 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.\n\nAt March 31, 2026, we had $23.9 million of borrowings outstanding on our Credit Facility and as of the date of this report, we had $157.6 million outstanding under our Credit Facility.\n\nInterest 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\n\n65\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nBusiness 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.\n\nAmong 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 $476.6 million as of March 31, 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 March 31, 2026, and as defined in the performance guaranty of our Credit Facility, we had a net worth of $1.2 billion, asset coverage on our senior securities representing indebtedness of 213.8%, 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 March 31, 2026, we had availability, after adjustments for various constraints based on collateral quality, of $276.1 million under our Credit Facility and were in compliance with all covenants under our Credit Facility.\n\nNotes Payable\n\n5.00% Notes due 2026\n\nIn 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 were traded under the ticker symbol “GAINN” on Nasdaq. On May 1, 2026, we repaid the 5.00% 2026 Notes with an aggregate principal amount outstanding of $127.9 million at maturity.\n\nThe 5.00% 2026 Notes were 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 were recorded as discounts to the aggregate principal amount on our accompanying Consolidated Statements of Assets and Liabilities and were being amortized over the period ended May 1, 2026, the maturity date.\n\n4.875% Notes due 2028\n\nIn 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.\n\nThe 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\n\n66\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nNotes and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.\n\nThe 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.\n\n8.00% Notes due 2028\n\nIn 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. On December 16, 2025, we voluntarily redeemed 100% of the issued and outstanding 8.00% 2028 Notes. The 8.00% 2028 Notes would have otherwise matured on August 1, 2028. We incurred a loss on extinguishment of debt of $1.3 million, which was recorded in Realized loss on other in our accompanying Consolidated Statements of Operations and which was primarily comprised of unamortized deferred offering costs at the time of redemption.\n\n7.875% Notes due 2030\n\nIn 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 million per year), payable quarterly in arrears.\n\nThe 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.\n\nThe 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.\n\n67\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\n6.875% Notes due 2028\n\nIn 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 million per year), payable semi-annually in arrears.\n\nThe 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.\n\nThe 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.\n\n7.125% Notes due 2031\n\nIn 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 million per year), payable quarterly in arrears.\n\nThe 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.\n\nThe 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.\n\nOFF-BALANCE SHEET ARRANGEMENTS\n\nUnlike 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 March 31, 2026 and 2025, we had unrecognized, contractual off-balance sheet success fee receivables of $65.4 million and $52.5 million (or approximately $1.64 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.\n\n68\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nCONTRACTUAL OBLIGATIONS\n\nWe 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 March 31, 2026 to be insignificant.\n\nThe following table shows our contractual obligations as of March 31, 2026, at cost:\n\nPayments Due by Period\n\nContractual Obligations(A)\nTotalLess than\n1 Year1-3 Years3-5 YearsMore than\n5 Years\n\nCredit Facility(B)\n$23,900 $— $23,900 $— $— \n\nNotes payable548,988 127,938 194,550 126,500 100,000 \n\nInterest payments on obligations(C)\n114,296 32,804 58,346 22,552 594 \n\nTotal$687,184 $160,742 $276,796 $149,052 $100,594 \n\n(A)Excludes unused line of credit commitments to our portfolio companies in the aggregate principal amount of $0.6 million.\n\n(B)Principal balance of borrowings outstanding under our Credit Facility, based on the maturity date following the current contractual revolving period end date.\n\n(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 March 31, 2026.\n\nCritical Accounting Estimates\n\nThe 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 estimates, which is described in Note 2— Summary of Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report. Additionally, refer to Note 3 — Investments in the accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual 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.\n\nInvestment Valuation\n\nCredit Monitoring and Risk Rating\n\nThe 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.\n\nThe 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\n\n69\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\non 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.\n\nThe following table reflects risk ratings for all loans in our portfolio as of March 31, 2026 and 2025:\n\nAs of March 31,\n\nRating20262025\n\nHighest10.09.0\n\nAverage7.27.0\n\nWeighted-average7.67.7\n\nLowest4.03.0\n\nTax Status\n\nWe 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 “Business — Material U.S. Federal Income Tax Considerations” and “— Liquidity and Capital Resources — Distributions and Dividends to Stockholders.”\n\nIn 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. Our capital loss carryforward balance was $17.3 million and $0 as of March 31, 2026 and 2025, respectively.\n\nRecent Accounting Pronouncements\n\nRefer to Note 2 — Summary of Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report for a description of recent accounting pronouncements."}