gain-20230630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 814-00704

GLADSTONE INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)


Delaware						83-0423116
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1521 WESTBRANCH DRIVE, SUITE 100						22102
MCLEAN, VA						(Zip Code)
(Address of principal executive offices)

(703) 287-5800

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year,

if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.001 par value per share

GAIN

The Nasdaq Stock Market LLC

5.00% Notes due 2026

GAINN

The Nasdaq Stock Market LLC

4.875% Notes due 2028

GAINZ

The Nasdaq Stock Market LLC

8.00% Notes due 2028

GAINL

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of the issuer’s Common Stock, $0.001 par value per share, outstanding as of August 1, 2023 was 33,895,675.

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GLADSTONE INVESTMENT CORPORATION

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PART I.	FINANCIAL INFORMATION:

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Assets and Liabilities as of June 30, 2023 and March 31, 2023	2
	Consolidated Statements of Operations for the three months ended June 30, 2023 and 2022	3
	Consolidated Statements of Changes in Net Assets for the three months ended June 30, 2023 and 2022	4
	Consolidated Statements of Cash Flows for the three months ended June 30, 2023 and 2022	5
	Consolidated Schedules of Investments as of June 30, 2023 and March 31, 2023	6
	Notes to Consolidated Financial Statements	16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Overview	41
	Results of Operations	44
	Liquidity and Capital Resources	49

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56

Item 4.	Controls and Procedures	56

PART II.	OTHER INFORMATION:

Item 1.	Legal Proceedings	57

Item 1A.	Risk Factors	57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57

Item 3.	Defaults Upon Senior Securities	57

Item 4.	Mine Safety Disclosures	57

Item 5.	Other Information	57

Item 6.	Exhibits	57

SIGNATURES		59

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)


	June 30, 2023		March 31, 2023
ASSETS
Investments at fair value
Non-Control/Non-Affiliate investments (Cost of $444,780 and $429,305, respectively)	$	515,778	$	496,875
Affiliate investments (Cost of $308,555 and $276,055, respectively)	284,300		255,955
Control investments (Cost of $14,650 and $15,270, respectively)	—		713
Cash and cash equivalents	37,099		2,683
Restricted cash and cash equivalents	653		565
Interest receivable	3,826		3,038
Due from administrative agent	2,736		3,899
Deferred financing costs, net	372		431
Other assets, net	2,359		1,485
TOTAL ASSETS	$	847,123	$	765,644

LIABILITIES
Borrowings:
Line of credit at fair value (Cost of $46,200 and $35,200, respectively)	$	46,160	$	35,171
Notes payable, net	329,999		257,436
Total borrowings	376,159		292,607
Accounts payable and accrued expenses	1,650		786
Interest payable	2,923		2,309
Fees due to Adviser(A)	28,418		28,919
Fee due to Administrator(A)	885		716
Other liabilities	653		565
TOTAL LIABILITIES	$	410,688	$	325,902
Commitments and contingencies(B)
NET ASSETS	$	436,435	$	439,742

ANALYSIS OF NET ASSETS
Common stock, $0.001 par value per share, 100,000,000 shares authorized, 33,591,505 and 33,591,505 shares issued and outstanding, respectively	$	34	$	34
Capital in excess of par value	402,405		401,798
Cumulative net unrealized appreciation of investments	32,093		32,913
Cumulative net unrealized depreciation of other	40		29
Overdistributed net investment income	(3,880)		(5,527)
Accumulated net realized gain in excess of distributions	5,743		10,495
Total distributable earnings	33,996		37,910
TOTAL NET ASSETS	$	436,435	$	439,742

NET ASSET VALUE PER SHARE	$	12.99	$	13.09

(A)Refer to Note 4 — Related Party Transactions in the accompanying Notes to Consolidated Financial Statements for additional information.

(B)Refer to Note 9 — Commitments and Contingencies in the accompanying Notes to Consolidated Financial Statements for additional information.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)


	Three Months Ended June 30,
	2023		2022
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate investments	$	12,490	$	8,728
Affiliate investments	5,616		4,010
Cash and cash equivalents	287		3
Total interest income	18,393		12,741
Dividend income
Non-Control/Non-Affiliate investments	—		4
Affiliate investments	1,907		1,552
Total dividend income	1,907		1,556
Success fee income
Non-Control/Non-Affiliate investments	—		5,000

Total success fee income	—		5,000
Total investment income	$	20,300	$	19,297

EXPENSES
Base management fee(A)	$	3,931	$	3,563
Loan servicing fee(A)	2,172		1,758
Incentive fee(A)	2,194		3,009
Administration fee(A)	522		380
Interest expense on borrowings	4,974		3,784
Amortization of deferred financing costs and discounts	545		448
Professional fees	284		295
Other general and administrative expenses	685		1,197
Expenses before credits from Adviser	15,307		14,434
Credits to base management fee – loan servicing fee(A)	(2,172)		(1,758)
Credits to fees from Adviser - other(A)	(1,275)		(750)
Total expenses, net of credits to fees	11,860		11,926
NET INVESTMENT INCOME	$	8,440	$	7,371

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss):
Non-Control/Non-Affiliate investments	$	—	$	4,729
Affiliate investments	273		—
Control investments	882		(277)
Total net realized gain	1,155		4,452
Net unrealized appreciation (depreciation):
Non-Control/Non-Affiliate investments	3,428		14,989
Affiliate investments	(4,155)		(14,777)
Control investments	(93)		—
Other	11		—
Total net unrealized (depreciation) appreciation	(809)		212
Net realized and unrealized gain	346		4,664

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	8,786	$	12,035

BASIC AND DILUTED PER COMMON SHARE:
Net investment income	$	0.25	$	0.22
Net increase in net assets resulting from operations	$	0.26	$	0.36

WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted	33,591,505		33,205,023

(A)Refer to Note 4 — Related Party Transactions in the accompanying Notes to Consolidated Financial Statements for additional information.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(IN THOUSANDS)

(UNAUDITED)


	2023		2022
NET ASSETS, MARCH 31	$	439,742	$	445,830
OPERATIONS
Net investment income	8,440		7,371
Net realized gain on investments	1,155		4,452
Net unrealized (depreciation) appreciation of investments	(820)		212
Net unrealized depreciation of other	11		—
Net increase in net assets from operations	8,786		12,035
DISTRIBUTIONS(A)
Distributions to common stockholders from net investment income ($0.21 and $0.10 per share, respectively)	(7,069)		(3,188)
Distributions to common stockholders from net realized gains ($0.15 and $0.25 per share, respectively)	(5,024)		(8,268)
Net decrease in net assets from distributions	(12,093)		(11,456)
CAPITAL ACTIVITY
Issuance of common stock	—		—
Discounts, commissions, and offering costs for issuance of common stock	—		—
Net increase in net assets from capital activity	—		—
NET (DECREASE) INCREASE IN NET ASSETS	(3,307)		579
NET ASSETS, JUNE 30	$	436,435	$	446,409

(A)Refer to Note 8 — Distributions to Common Stockholders in the accompanying Notes to Consolidated Financial Statements for additional information.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)


	Three Months Ended June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	8,786	$	12,035
Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in) provided by operating activities:
Purchase of investments	(47,975)		(27,800)
Principal repayments of investments	—