Gladstone Investment Corporation Initial filing of a registration statement on Form N-2 for closed-end investment companies

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 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 investment 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 75% in debt investments and 25% in equity investments, at cost. As of December 31, 2023, our investment portfolio was comprised of 76.6% in debt investments and 23.4% in equity investments, at cost.

We focus on investing in lower middle market private businesses (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization of $4 million to $15 million) 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 or acquisition 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.

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 and any future BDC or

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. 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.

In general, our investments in debt securities have a term of five years, accrue interest at variable rates (generally based on

one-month

term Secured Overnight Financing Rate (“SOFR”), or, historically, the

30-day

London Interbank Offered Rate (“LIBOR”)) and, to a lesser extent, at fixed rates. We seek debt instruments that pay interest monthly or, at a minimum, quarterly, and which may include a yield enhancement such as a success fee or, to a lesser extent, deferred interest provision and are primarily interest only, with all principal and any accrued but unpaid interest due at maturity. Generally, success fees accrue at a set rate and are contractually due upon a change of control of the portfolio company. Some debt securities may have deferred interest whereby some portion of the interest payment is added to the principal balance so that the interest is paid, together with the principal, at maturity. This form of deferred interest is often called

“paid-in-kind”

(“PIK”) interest. As of December 31, 2023, we did not have any securities with a PIK feature.

Typically, our investments in equity securities take the form of common stock, preferred stock, limited liability company interests, or warrants or options to purchase any of the foregoing. Often, these equity investments occur in connection with our original investment, buyouts and recapitalizations of a business, or refinancing existing debt. From our initial public offering in June 2005 through December 31, 2023, we invested in 58 companies, excluding investments in syndicated loans.

We expect that our investment portfolio will continue to primarily include the following three categories of investments in private companies in the U.S.:

•

Secured First Lien Debt Securities:

We seek to invest a portion of our assets in secured first lien debt securities also known as senior loans, senior term loans, lines of credit and senior notes. Using its assets as collateral, the borrower typically uses secured first lien debt to cover a substantial portion of the funding needs of the business. These debt securities usually take the form of first priority liens on all, or substantially all, of the assets of the business.

•

Secured Second Lien Debt Securities:

We seek to invest a portion of our assets in secured second lien debt securities, which may also be referred to as subordinated loans, subordinated notes and mezzanine loans. These secured second lien debt securities rank junior to the borrower’s secured first lien debt securities and may be secured by second priority liens on all or a portion of the assets of the business. Additionally, we may receive other yield enhancements in addition to or in lieu of success fees, such as warrants to buy common and preferred stock or limited liability interests, in connection with these second lien secured debt securities.

•

Preferred and Common Equity/Equivalents:

We seek to invest a portion of our assets in equity securities, which consist of preferred and common equity, limited liability company interests, warrants

or options to acquire such securities, and are generally in combination with our debt investment in a business. Additionally, we may receive equity investments derived from restructurings on some of our existing debt investments. In many cases, we will own a significant portion of the equity of the businesses in which we invest.

Under the 1940 Act, we may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as “qualifying assets” and generally include each of the investment types listed above, unless, at the time the acquisition is made, qualifying assets (other than certain assets related to our operations) represent at least 70.0% of our total assets. See “—

Regulation as a BDC — Qualifying Assets

” in our most recently filed Annual Report on Form

10-K

for a discussion of the types of qualifying assets in which we are permitted to invest pursuant to Section 55(a) of the 1940 Act.

We expect that most, if not all, of the debt securities we acquire will not be rated by a rating agency. Investors should assume that these loans would be rated below what is considered “investment grade” quality. Investments rated below investment grade are often referred to as high yield securities or junk bonds and may be considered higher risk as compared to investment grade debt instruments.

Risk Factors [Table Text Block]

RISK FACTORS

An investment in any Securities offered pursuant to this prospectus involves substantial risks. You should carefully consider the risk factors incorporated by reference herein from our most recent Annual Report on Form 10-K and our subsequent Quarterly Reports on Form 10-Q and the other information contained in this prospectus, as updated, amended or superseded by our subsequent filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the risk factors and other information contained in any accompanying prospectus supplement before acquiring any of such Securities. The occurrence of any of these risks could materially and adversely affect our business, prospects, financial condition, results of operations and cash flow and might cause you to lose all or part of your investment in the offered Securities. Much of the business information, as well as the financial and operational data contained in our risk factors, is updated in our periodic reports filed with the SEC pursuant to the Exchange Act, which are also incorporated by reference into this prospectus. Although we believe the risk factors described in such documents are the principal risk factors associated with an investment in our Securities as well as those factors generally associated with an investment company with investment objectives, investment policies, capital structure or trading markets similar to ours, please be aware that these are not the only risks we face and there may be additional risks that we do not presently know of or that we currently consider not likely to have a significant impact. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our business or our financial performance. Please also refer to “Special Note Regarding Forward-Looking Statements.”

Share Price [Table Text Block]

PRICE RANGE OF COMMON STOCK

The information contained under the caption “

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

” in Part II. Item 5 of our most recent Annual Report on Form 10-K is incorporated by reference herein.

Share Price

$ 14.28

NAV Per Share

$ 13.01

Capital Stock, Long-Term Debt, and Other Securities [Abstract]

Long Term Debt [Table Text Block]

Debt Securities

Any debt securities that we issue may be senior or subordinated in priority of payment. If we offer debt securities under this prospectus, we will provide a prospectus supplement that describes the ranking, whether senior or subordinated, the specific designation, the aggregate principal amount, the purchase price, the maturity, the redemption terms, the interest rate or manner of calculating the interest rate, the time of payment of interest, if any, the terms for any conversion or exchange, including the terms relating to the adjustment of any conversion or exchange mechanism, the listing, if any, on a securities exchange, the name and address of the trustee and any other specific terms of the debt securities.

The description of our debt securities included in Exhibit 4.5 of our most recent Annual Report on

Form 10-K

or included in any subsequent Quarterly Report on Form

10-Q

is incorporated by reference herein.

Long Term Debt, Title [Text Block]

Debt Securities

Other Security, Title [Text Block]

Warrants

Warrants or Rights, Called Title

Subscription Rights

Outstanding Securities [Table Text Block]

The following are our outstanding classes, and series thereof, of Securities as of February 23, 2024.


(1) Title of Class	(2) Amount Authorized		(3) Amount Held by us or for Our Account		(4) Amount Outstanding Exclusive of Amounts Shown Under(3)
Common Stock		100,000,000 shares		—		36,688,667 shares
5.00% Notes due 2026	$	127,937,500		—	$	127,937,500
4.875% Notes due 2028	$	134,550,000		—	$	134,550,000
8.00% Notes due 2028	$	74,750,000			$	74,750,000

Business Contact [Member]

Cover [Abstract]

Entity Address, Address Line One

1521 Westbranch Drive

Entity Address, Address Line Two

Suite 100

Entity Address, City or Town

McLean

Entity Address, State or Province

Entity Address, Postal Zip Code

22102

Contact Personnel Name

David Gladstone

Common Stock

Capital Stock, Long-Term Debt, and Other Securities [Abstract]

Outstanding Security, Title [Text Block]

Common Stock

Outstanding Security, Authorized [Shares]

100,000,000

Outstanding Security, Held [Shares]

Outstanding Security, Not Held [Shares]

36,688,667

5.00% Notes due 2026

Capital Stock, Long-Term Debt, and Other Securities [Abstract]

Outstanding Security, Title [Text Block]

5.00% Notes due 2026

Outstanding Security, Authorized [Shares]

127,937,500

Outstanding Security, Held [Shares]

Outstanding Security, Not Held [Shares]

127,937,500

4.875% Notes due 2028

Capital Stock, Long-Term Debt, and Other Securities [Abstract]

Outstanding Security, Title [Text Block]

4.875% Notes due 2028

Outstanding Security, Authorized [Shares]

134,550,000

Outstanding Security, Held [Shares]

Outstanding Security, Not Held [Shares]

134,550,000

8.00% Notes due 2028

Capital Stock, Long-Term Debt, and Other Securities [Abstract]

Outstanding Security, Title [Text Block]

8.00% Notes due 2028

Outstanding Security, Authorized [Shares]

74,750,000

Outstanding Security, Not Held [Shares]

74,750,000

Common Shares [Member]

Capital Stock, Long-Term Debt, and Other Securities [Abstract]

Security Title [Text Block]

Common Stock

Security Dividends [Text Block]

Distributions may be paid to the holders of our common stock if, as and when declared by our Board of Directors out of funds legally available therefor.

Security Voting Rights [Text Block]

Each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of our common stock will possess exclusive voting power. Except as otherwise provided by statute, by the rules of Nasdaq or other applicable stock exchange, by our certificate of incorporation or by our bylaws, in all matters other than the election of directors, the affirmative vote of the majority of shares present or represented by proxy at a meeting of our stockholders and entitled to vote will be the act of the stockholders. Except as otherwise provided by statute, by our certificate of incorporation or by our bylaws, directors shall be elected by a plurality of the votes of the shares present or represented by proxy at a meeting of our stockholders and entitled to vote on the election of directors. Our common stock is listed on Nasdaq under the ticker symbol “GAIN.”

Security Liquidation Rights [Text Block]

In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time.

Security Preemptive and Other Rights [Text Block]

Shares of our common stock have no preemptive, exchange, conversion or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract.

Preferred Shares [Member]

Capital Stock, Long-Term Debt, and Other Securities [Abstract]

Security Title [Text Block]

Preferred Stock