Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ 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 ...

Gladstone Investment Corporation (NASDAQ:GAIN) Q1 2019 Earnings Conference Call August 1, 2019 8:30 AM ET Company Participants David Gladstone - Chairman and Chief Executive Officer Michael LiCalsi - General Counsel and Secretary David Dullum - President Nicole Schaltenbrand - Interim Chief Financial Officer Conference Call Participants Kyle Joseph - Jefferies LLC Mickey Schlein - Ladenburg Thalmann Financial Services, Inc. Operator Good day, ladies and gentlemen, and welcome to the Gladstone Investment Cor ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ 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 83-0423 ...

Gladstone Investment (NASDAQ:GAIN) Q4 2018 Results Earnings Conference Call May 14, 2019 8:30 AM ET Company Participants David Gladstone - Chairman and CEO Michael LiCalsi - General Counsel and Secretary David Dullum - President Julia Ryan - Chief Financial Officer Conference Call Participants Henry Coffey - Wedbush Operator Good day, ladies and gentlemen, and welcome to the Gladstone Investment Corporation's Fourth Quarter and Year Ended March 31, 2019 Earnings Call and Web Call. At this time, all particip ...

PART I [ITEM 1. BUSINESS](index=4&type=section&id=ITEM%201%20Business) The company operates as a BDC and RIC, investing in debt and equity of U.S. lower middle market businesses - Gladstone Investment Corporation is an externally managed, closed-end, non-diversified management investment company, elected to be treated as a Business Development Company (BDC) and a Regulated Investment Company (RIC)[14](index=14&type=chunk) - The company's investment objectives are to achieve and grow current income through debt securities and provide long-term capital appreciation through equity securities of established U.S. private businesses[19](index=19&type=chunk) - The investment strategy targets lower middle market private businesses (**EBITDA of $3 million to $20 million**) with sustainable free cash flow, adequate collateral, experienced management, and potential for equity appreciation[20](index=20&type=chunk) Investment Portfolio Composition (at Cost) | Security Type | March 31, 2019 | March 31, 2018 | | :-------------- | :------------- | :------------- | | Debt Securities | 75.1% | 73.8% | | Equity Securities | 24.9% | 26.2% | | **Total** | **100.0%** | **100.0%** | Top 5 Portfolio Investments (Fair Value) | Company | March 31, 2019 (Fair Value) | Percentage of Total Portfolio | | :------------------------------ | :-------------------------- | :---------------------------- | | Nth Degree, Inc. | $60.2 million | 9.7% | | J.R. Hobbs Co. – Atlanta, LLC | $53.8 million | 8.6% | | Brunswick Bowling Products, Inc.| $41.4 million | 6.6% | | Counsel Press, Inc. | $40.2 million | 6.4% | | Pioneer Square Brands, Inc. | $32.1 million | 5.1% | | **Total Top 5** | **$227.8 million** | **36.4%** | - The company's investment process involves extensive due diligence, including financial analysis, site visits, management interviews, and market research, with all investments requiring approval from the Adviser's investment committee[33](index=33&type=chunk)[37](index=37&type=chunk)[40](index=40&type=chunk) - The company's competitive advantages include management expertise, extensive network for investment opportunities, a disciplined value- and income-oriented investment philosophy, a longer investment horizon, and flexible transaction structuring[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - The company pays its Adviser a base management fee (**2.0% of average gross assets**) and an incentive fee, with certain fees credited back to the company[63](index=63&type=chunk)[64](index=64&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) - To qualify as a RIC, the company must distribute at least **90% of its taxable ordinary income** and net short-term capital gains, and meet income source and asset diversification requirements[80](index=80&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[86](index=86&type=chunk) Adviser and Administrator Staffing (as of April 30, 2019) | Functional Area | Number of Individuals | | :------------------------------------------------ | :-------------------- | | Executive management | 11 | | Accounting, administration, compliance, human resources, legal, and treasury | 23 | | Investment management, portfolio management, and due diligence | 35 | | **Total** | **69** | [ITEM 1A. RISK FACTORS](index=21&type=section&id=ITEM%201A%20Risk%20Factors) The company faces significant risks across economic, investment, financing, regulatory, and management categories - The company faces risks from market conditions, including changes in interest rates, credit availability, and economic downturns, which can negatively impact business, results of operations, and investment valuations[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Investments in Lower Middle Market companies are **inherently risky** due to limited resources, lack of public information, unpredictable operating results, and high leverage, potentially leading to significant losses[120](index=120&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - Valuation of privately held securities involves subjective judgments and estimates, which can fluctuate and materially differ from realized values, adversely affecting **Net Asset Value (NAV)**[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[130](index=130&type=chunk) - The company's business plan relies on external financing, which is constrained by the 1940 Act's asset coverage limitations (**150% for senior securities** as of April 10, 2019)[144](index=144&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - **Significant potential conflicts of interest** exist with the external Adviser due to shared management, allocation of investment opportunities, and the incentive fee structure[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[190](index=190&type=chunk)[198](index=198&type=chunk) - Investment in the company's securities carries risks such as fluctuating operating results, no guaranteed distributions, trading at a discount to NAV, and **potential dilution from future equity offerings**[199](index=199&type=chunk)[200](index=200&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=39&type=section&id=ITEM%201B%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - The company has no unresolved staff comments[227](index=227&type=chunk) [ITEM 2. PROPERTIES](index=40&type=section&id=ITEM%202%20Properties) The company does not own any material real estate, operating from premises leased by its affiliates - The company does not own any material real estate or physical properties; it operates from premises leased by its Adviser and Administrator[228](index=228&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=40&type=section&id=ITEM%203%20Legal%20Proceedings) The company may be involved in ordinary course legal proceedings not expected to materially affect its finances - The company may be involved in legal proceedings and claims, including those related to portfolio companies, which could result in costs and diversion of management time, though no material adverse effect on financial condition is currently expected[229](index=229&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=40&type=section&id=ITEM%204%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the registrant[230](index=230&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=41&type=section&id=ITEM%205%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details the market for the company's stock, its distribution policy, and stockholder expenses - The company's common stock (GAIN) and preferred stock (GAINM, GAINL) are traded on the Nasdaq Global Select Market[15](index=15&type=chunk)[233](index=233&type=chunk) Common Stock Performance and Distributions | Quarter Ended/Ending | NAV (A) | High Sales Price | Low Sales Price | Distributions per Common Share | | :------------------- | :------ | :--------------- | :-------------- | :----------------------------- | | 3/31/2018 | $10.85 | $11.42 | $9.00 | $0.1950 | | 6/30/2018 | $11.57 | $12.26 | $9.81 | $0.2610 (C) | | 9/30/2018 | $12.30 | $12.15 | $10.95 | $0.2010 | | 12/31/2018 | $12.53 | $11.50 | $8.70 | $0.2640 (C) | | 3/31/2019 | $12.40 | $12.07 | $9.23 | $0.2040 | | 6/30/2019 (through May 10, 2019) | * | $12.70 | $11.67 | $0.2940 (C) | - The company generally distributes up to 100% of its Investment Company Taxable Income to stockholders monthly and may retain net realized long-term capital gains, designating them as deemed distributions[89](index=89&type=chunk)[234](index=234&type=chunk) Annual Expenses (as a percentage of net assets attributable to common stock) | Expense Category | Percentage (FY2019) | | :----------------- | :------------------ | | Base management fee | 3.06% | | Loan servicing fee | 1.64% | | Incentive fees | 3.32% | | Interest payments on borrowed funds | 1.29% | | Dividend expense on mandatorily redeemable preferred stock | 2.21% | | Other expenses | 1.16% | | **Total Annual Expenses** | **12.68%** | Senior Securities Data (Total Amount Outstanding Exclusive of Treasury Securities) | Class and Year | March 31, 2019 | March 31, 2018 | | :------------------------------------------ | :------------- | :------------- | | 6.25% Series D Cumulative Term Preferred Stock due 2023 | $57,500,000 | $57,500,000 | | 6.375% Series E Cumulative Term Preferred Stock due 2025 | $74,750,000 | — | | Revolving credit facilities | $53,000,000 | $107,000,000 | | Secured borrowings | $5,095,785 | $5,095,785 | [ITEM 6. SELECTED FINANCIAL DATA](index=48&type=section&id=ITEM%206%20Selected%20Financial%20Data) This section presents a five-year summary of key consolidated financial and operational data Consolidated Selected Financial Data (Years Ended March 31) | Metric | 2019 | 2018 | 2017 | 2016 | 2015 | | :------------------------------------------------ | :----- | :----- | :----- | :----- | :----- | | **Statement of Operations Data:** | | | | | | | Total investment income | $59,663 | $58,355 | $51,875 | $50,955 | $41,643 | | Total expenses, net of credits from Adviser | $52,122 | $36,395 | $29,453 | $30,239 | $21,746 | | Net investment income | $7,541 | $21,960 | $22,422 | $20,716 | $19,897 | | Net increase in net assets resulting from operations | $81,590 | $60,687 | $44,763 | $24,854 | $50,214 | | **Per Common Share Data:** | | | | | | | Net increase in net assets resulting from operations per common share | $2.49 | $1.88 | $1.48 | $0.82 | $1.88 | | Net investment income per common share | $0.23 | $0.68 | $0.74 | $0.68 | $0.75 | | Cash distributions declared per common share | $0.93 | $0.89 | $0.75 | $0.75 | $0.77 | | **Statement of Assets and Liabilities Data:** | | | | | | | Total assets | $635,100| $610,899| $515,195| $506,260| $483,521| | Net assets | $407,110| $354,200| $301,082| $279,022| $273,429| | Net asset value per common share | $12.40 | $10.85 | $9.95 | $9.22 | $9.18 | | Common shares outstanding | 32,822,459| 32,653,635| 30,270,958| 30,270,958| 29,775,958| | **Senior Securities Data:** | | | | | | | Total borrowings, at cost | $58,096 | $112,096| $74,796 | $100,096| $123,896| | Mandatorily redeemable preferred stock | $132,250| $139,150| $139,150| $121,650| $81,400 | | **Other Unaudited Data:** | | | | | | | Number of portfolio companies | 30 | 33 | 35 | 36 | 34 | | Principal amount of new investments | $57,761 | $59,424 | $54,370 | $69,380 | $108,197| | Proceeds from loan repayments and investments sold| $154,651| $39,859 | $68,825 | $44,582 | $11,260 | | Weighted-average yield on investments (excluding non-accrual) | 13.04% | 13.06% | 12.65% | 12.62% | 12.60% | | Total return | 24.95% | 21.82% | 41.58% | 4.82% | 11.96% | [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=50&type=section&id=ITEM%207%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial performance, liquidity, capital resources, and critical accounting policies - The company's investment portfolio consisted of 30 companies as of March 31, 2019, a net reduction of three companies from the prior year, with **$57.8 million invested in two new portfolio companies**[278](index=278&type=chunk)[289](index=289&type=chunk) - Unrecognized contractual success fees amounted to **$30.1 million** ($0.92 per common share) as of March 31, 2019, which are generally recognized as income upon cash receipt[280](index=280&type=chunk)[374](index=374&type=chunk) - The company successfully exited 16 portfolio companies since inception, generating **$185.9 million in net realized gains** and $23.4 million in other income[281](index=281&type=chunk) - The company's Credit Facility was extended to August 2021 with a total commitment of $200.0 million, and the asset coverage requirement for senior securities changed from **200% to 150%**[282](index=282&type=chunk)[287](index=287&type=chunk) Key Financial Performance (FY2019 vs. FY2018) | Metric | FY2019 | FY2018 | $ Change | % Change | | :------------------------------------------------ | :----- | :----- | :------- | :------- | | Total investment income | $59,663 | $58,355 | $1,308 | 2.2% | | Total expenses, net of credits to fees | $52,122 | $36,395 | $15,727 | 43.2% | | Net investment income | $7,541 | $21,960 | $(14,419)| (65.7)% | | Net realized gain on investments | $68,556 | $1,336 | $67,220 | NM | | Taxes on deemed distribution of long-term capital gains | $(13,500)| — | $(13,500)| NM | | Net unrealized appreciation of investments | $20,180 | $37,891 | $(17,711)| (46.7)% | | Net increase in net assets resulting from operations | $81,590 | $60,687 | $20,903 | 34.4% | - **Net cash provided by operating activities was $93.6 million** in FY2019, a significant increase from net cash used of $29.7 million in FY2018, driven by higher net proceeds from investment sales[339](index=339&type=chunk) Contractual Obligations (as of March 31, 2019, in thousands) | Contractual Obligations | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | | :---------------------- | :---- | :--------------- | :-------- | :-------- | :---------------- | | Credit Facility | $53,000 | $— | $— | $53,000 | $— | | Mandatorily redeemable preferred stock | $132,250| $— | $— | $57,500 | $74,750 | | Secured borrowing | $5,096 | $— | $5,096 | $— | $— | | Interest payments on obligations | $66,570 | $13,096 | $25,718 | $21,005 | $6,751 | | **Total** | **$256,916**| **$13,096** | **$30,814**| **$131,505**| **$81,501** | [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=73&type=section&id=ITEM%207A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the company's exposure to market risks, with a primary focus on interest rate risk - The primary market risk exposure is **interest rate risk**, as net investment income depends on the spread between borrowing and investment rates[386](index=386&type=chunk) Debt Investment Portfolio Breakdown by Rate Type (Principal Balance) | Rate Type | 2019 | 2018 | | :---------------------- | :--- | :--- | | Variable rates with a floor | 97.4%| 97.0%| | Fixed rates | 2.6% | 3.0% | | **Total** | **100.0%**| **100.0%**| Hypothetical Impact of Interest Rate Changes on Net Assets (as of March 31, 2019, in thousands) | Basis Point Change | Increase (Decrease) in Interest Income | Increase (Decrease) in Interest Expense | Net Increase (Decrease) in Net Assets Resulting from Operations | | :----------------- | :------------------------------------- | :-------------------------------------- | :-------------------------------------------------------------- | | Up 300 basis points| $10,694 | $1,613 | $9,081 | | Up 200 basis points| $7,008 | $1,075 | $5,993 | | Up 100 basis points| $3,362 | $538 | $2,824 | | Down 100 basis points| $(2,036) | $(538) | $(1,498) | | Down 200 basis points| $(2,337) | $(1,075) | $(1,262) | | Down 249 basis points| $(2,337) | $(1,341) | $(996) | [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=74&type=section&id=ITEM%208%20Financial%20Statements%20and%20Supplementary%20Data) This item presents the company's audited consolidated financial statements and related reports - The section includes the Consolidated Statements of Assets and Liabilities, Consolidated Statements of Operations, Consolidated Statements of Changes in Net Assets, and Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2019, 2018, and 2017[392](index=392&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of March 31, 2019, based on the COSO framework[396](index=396&type=chunk) - PricewaterhouseCoopers LLP provided an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting as of March 31, 2019[401](index=401&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=126&type=section&id=ITEM%209%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - There are no changes in or disagreements with accountants on accounting and financial disclosure[607](index=607&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=126&type=section&id=ITEM%209A%20Controls%20and%20Procedures) Management evaluated and confirmed the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that **disclosure controls and procedures were effective** at a reasonable assurance level as of March 31, 2019[608](index=608&type=chunk) - There were no changes in internal controls for the three months ended March 31, 2019, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[611](index=611&type=chunk) [ITEM 9B. OTHER INFORMATION](index=126&type=section&id=ITEM%209B%20Other%20Information) This item is not applicable to the company - No other information is required to be reported under this item[612](index=612&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=127&type=section&id=ITEM%2010%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information is incorporated by reference from the company's 2019 Proxy Statement - Information for this item is incorporated by reference from the company's 2019 Proxy Statement[615](index=615&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=127&type=section&id=ITEM%2011%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2019 Proxy Statement - Information for this item is incorporated by reference from the company's 2019 Proxy Statement[615](index=615&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=127&type=section&id=ITEM%2012%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference from the 2019 Proxy Statement - Information for this item is incorporated by reference from the company's 2019 Proxy Statement[616](index=616&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=127&type=section&id=ITEM%2013%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on related transactions is incorporated by reference from the 2019 Proxy Statement - Information for this item is incorporated by reference from the company's 2019 Proxy Statement[616](index=616&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=127&type=section&id=ITEM%2014%20Principal%20Accountant%20Fees%20and%20Services) Information on accountant fees is incorporated by reference from the 2019 Proxy Statement - Information for this item is incorporated by reference from the company's 2019 Proxy Statement[617](index=617&type=chunk) PART IV [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=128&type=section&id=ITEM%2015%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the 10-K report - The report includes consolidated financial statements, schedules of investments, and notes to consolidated financial statements[620](index=620&type=chunk) - Various exhibits are filed, including the Amended and Restated Certificate of Incorporation, Bylaws, Investment Advisory and Management Agreement, and Administration Agreement[620](index=620&type=chunk)[625](index=625&type=chunk) [ITEM 16. FORM 10-K Summary](index=130&type=section&id=ITEM%2016%20Form%2010-K%20Summary) The company does not provide a Form 10-K summary - The company does not provide a Form 10-K Summary[623](index=623&type=chunk) [SIGNATURES](index=131&type=section&id=SIGNATURES) This section contains the required signatures of the registrant's authorized officers and directors - The report is signed by the Chief Financial Officer and Treasurer, Chief Executive Officer and Chairman, Vice Chairman and Chief Operating Officer, and other Directors[629](index=629&type=chunk)[630](index=630&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2018 OR ☐ 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- ...