OVERVIEW OF GLADSTONE INVESTMENT CORPORATION’S FINANCIAL PERFORMANCE

Gladstone Investment Corporation is an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company (BDC) under the Investment Company Act of 1940. The company’s primary investment objectives are to achieve current income by investing in debt securities of established private businesses in the United States, and to provide long-term capital appreciation by investing in equity securities of those businesses.

Investment Activity and Portfolio Over the nine months ended December 31, 2024, Gladstone Investment made several key investments and exits:

• In May 2024, the company exited its remaining investment in Funko Acquisition Holdings, LLC, realizing a small gain.
• In July 2024, Gladstone invested an additional $18.5 million in secured debt to fund an acquisition by portfolio company Nocturne Luxury Villas, Inc.
• In September 2024, the company exited its investment in Nth Degree Investment Group, LLC, realizing a large gain of $42.3 million on its preferred equity and receiving repayment of its $25 million debt investment.
• Gladstone made several new investments, including $27.2 million in Pyrotek Special Effects, Inc., $71.3 million in Nielsen-Kellerman, Inc., and $78.7 million in Ricardo Defense, Inc.

Overall, Gladstone’s investment portfolio was valued at $1.07 billion as of December 31, 2024, up from $902.8 million a year earlier. The portfolio consisted of 76.3% debt investments and 23.7% equity investments at cost. The company has been able to generate significant realized gains from exiting investments over time, which have offset any realized losses.

Capital Raising and Financing Gladstone has been successful in accessing the capital markets to fund its investment activities. During the nine months ended December 31, 2024, the company issued $126.5 million of 7.875% Notes due 2030 and sold $2 million of common stock through its at-the-market equity program.

The company also has a $250 million revolving credit facility, which was recently amended to increase the size and update certain terms. As of December 31, 2024, Gladstone had $91.5 million outstanding on the credit facility.

While Gladstone has been able to raise capital historically, the trading price of its common stock relative to net asset value can constrain its ability to issue new equity. As of December 31, 2024, the stock was trading at a 0.4% discount to NAV.

Financial Performance For the three months ended December 31, 2024, Gladstone reported:

• Total investment income of $21.4 million, down 7.4% from the prior year period, due to decreases in interest income and dividend/success fee income.
• Net investment income of $1.2 million, down 88.1% from the prior year period, primarily due to an increase in the capital gains-based incentive fee.
• Net realized and unrealized gains of $37.3 million, compared to a $3.2 million loss in the prior year period, driven by unrealized appreciation in the portfolio.
• A net increase in net assets resulting from operations of $38.5 million, up 485.0% from the prior year period.

For the nine months ended December 31, 2024, the company reported:

• Total investment income of $66.1 million, up 3.9% from the prior year period.
• Net investment income of $20.9 million, up 26.8% from the prior year period.
• Net realized and unrealized gains of $26.6 million, down 42.6% from the prior year period, due to lower net realized gains.
• A net increase in net assets resulting from operations of $47.4 million, down 24.4% from the prior year period.

The decrease in net investment income for the three-month period was primarily due to a significant increase in the capital gains-based incentive fee, while the increase for the nine-month period was driven by higher interest income. The fluctuations in realized and unrealized gains were largely the result of the timing and magnitude of investment exits and changes in portfolio company valuations.

Distributions and Dividends Gladstone has maintained a consistent monthly distribution to common stockholders of $0.08 per share. The company also paid a $0.70 per share supplemental distribution in October 2024. These distributions are funded by the company’s net investment income and net realized capital gains.

Regulatory Compliance As a BDC, Gladstone is subject to regulatory requirements, including maintaining an asset coverage ratio of at least 150% on its senior securities. As of December 31, 2024, the company’s asset coverage ratio was 185.9%, well above the minimum threshold.

Outlook and Conclusion Gladstone Investment Corporation has demonstrated its ability to actively manage its investment portfolio, generate realized gains, and access the capital markets to fund new investments. The company’s focus on the lower middle market private businesses in the U.S. has provided a steady stream of investment opportunities consistent with its objectives.

While the company has faced some headwinds, such as increased incentive fees and a decline in net investment income for the three-month period, its overall financial performance remains strong. Gladstone’s diversified portfolio, conservative leverage, and access to capital position it well to continue pursuing its investment strategy and providing returns to shareholders.

The company’s outlook remains positive, as it continues to identify attractive investment opportunities and effectively recycle capital through successful exits. Gladstone’s experienced management team, disciplined investment approach, and shareholder-friendly policies suggest the company is well-equipped to navigate the current market environment and deliver long-term value.