{"url_path":"/sec/gainz/10-k/2026/item-7a","section_key":"item-7a","section_title":"Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK","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":783,"has_tables":true,"body_markdown":"ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK\n\nMarket risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. The prices of securities held by us may decline in response to certain events, including those directly involving the companies whose securities are owned by us; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and interest rate fluctuations.\n\nThe primary risk we believe we are exposed to is interest rate risk. Because we borrow money to make investments, our net investment income is dependent upon the difference between the rates at which we borrow funds, such as under our Credit Facility (which is variable) and our unsecured notes (which are fixed), and the rates at which we invest those funds. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. We use a combination of debt and equity capital to finance our investing activities. We may use interest rate risk management techniques to limit our exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.\n\n70\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)\n\nWe target to have approximately 90% of the loans in our portfolio at variable rates or variable rates with a floor mechanism, and approximately up to 10% at fixed rates. As of March 31, 2026 and 2025, all of our variable-rate loans had rates associated with the current 30-day SOFR rate and our total debt investment portfolio consisted of the following breakdown based on the principal balance:\n\nAs of March 31,\n\nRates:20262025\n\nVariable rates with a floor100.0 %100.0 %\n\nFixed rates— %— %\n\nTotal100.0 %100.0 %\n\nWe had $23.9 million of borrowings outstanding under our Credit Facility as of March 31, 2026 and no borrowings outstanding as of March 31, 2025. As of March 31, 2026, the 5.00% 2026 Notes, 4.875% 2028 Notes, 6.875% 2028 Notes, 7.875% 2030 Notes, and 7.125% 2031 Notes had outstanding principal balances of $127.9 million, $134.6 million, $60.0 million, $126.5 million and $100.0 million, respectively. As of March 31, 2025, the 5.00% 2026 Notes, 4.875% 2028 Notes, 8.00% 2028 Notes and 7.875% 2030 Notes had outstanding principal balances of $127.9 million, $134.6 million, $74.8 million and $126.5 million, respectively.\n\nAdvances 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\nTo illustrate the potential impact of changes in interest rates, we have performed the following hypothetical analysis, which assumes that our balance sheet and interest rates remain constant as of March 31, 2026 and no further actions are taken to alter our existing interest rate sensitivity.\n\nBasis Point ChangeIncrease (Decrease)\nin Interest IncomeIncrease (Decrease) in Interest ExpenseNet Increase (Decrease) in Net Assets Resulting from Operations\n\nUp 300 basis points$16,555 $727 $15,828 \n\nUp 200 basis points$9,403 $485 $8,918 \n\nUp 100 basis points$3,666 $242 $3,424 \n\nDown 100 basis points$(2,636)\n\n$(242)\n\n$(2,394)\n\nDown 200 basis points$(4,374)\n\n$(485)\n\n$(3,889)\n\nDown 300 basis points$(4,567)\n\n$(727)\n\n$(3,840)\n\nAlthough management believes that this analysis is indicative of our existing interest rate sensitivity, it does not adjust for potential changes in credit quality, size and composition of our loan portfolio on the balance sheet and other business developments, including portfolio company defaults, that could affect net increase (decrease) in net assets resulting from operations. Accordingly, actual results could differ significantly from those in the hypothetical analysis in the table above.\n\nWe may also experience risk associated with investing in securities of companies with foreign operations. Some of our portfolio companies have operations located outside the U.S. These risks include, but are not limited to, fluctuations in foreign currency exchange rates, potential tariffs, imposition of foreign taxes, changes in exportation regulations and political and social instability.\n\n71\n\n[Table of Contents](#id4d58da65d414707b3cd9972f3050497_7)"}