Company: GAINI
Filing Date: 2025-05-13
Form Type: 10-K
Source: 0001321741-25-000010
Chunk: 146

Company: GLADSTONE INVESTMENT CORPORATION\DE
Filing Date: 2025-05-13
Form: 10-K
Item: Item 1A
Chunk 146
---
10%Corresponding return to common stockholder(A)(25.96)%(15.87)%(5.79)%4.29%14.37%(A)The hypothetical return to common stockholders is calculated by multiplying our total assets as of March 31, 2025 by the assumed rates of return and subtracting all interest on our debt expected to be paid during the twelve months following March 31, 2025, and then dividing the resulting difference by our total net assets attributable to common stock as of March 31, 2025. Based on $1.0 billion in total assets, no borrowings outstanding on our Credit Facility, $127.9 million of 5.00% 2026 Notes, at cost, $134.6 million of 4.875% 2028 Notes, at cost, $74.8 million of 8.00% 2028 Notes, at cost, $126.5 million of 7.875% 2030 Notes, at cost, and $499.1 million in net assets as of March 31, 2025. 

Based on an aggregate outstanding indebtedness of $463.7 million, at cost, as of March 31, 2025, the effective annual cash interest rate of 6.2% as of that date, our investment portfolio at fair value would have to produce an annual return of at least 3.0% to cover annual interest payments on the outstanding debt. 

31

Risks Related to Our Regulation and StructureWe will be subject to corporate-level tax if we are unable to satisfy the Code requirements for RIC qualification.To maintain our qualification as a RIC, we must maintain our status as a BDC and meet annual distribution, income source, and asset diversification requirements. The annual distribution requirement is satisfied if we distribute at least 90% of our Investment Company Taxable Income to our stockholders on an annual basis. Because we use leverage, we are subject to certain asset coverage ratio requirements under the 1940 Act and could, under certain circumstances, be restricted from making distributions necessary to qualify as a RIC. Warrants we may receive with respect to debt investments generally create original issue discount (“OID”), which we must recognize as ordinary income over the term of the debt investment. Similarly, PIK interest which is accrued generally over the term of the debt investment but not paid in cash, is recognized as ordinary income. Both OID and PIK interest will increase the amounts