Gladstone Investment Corporation Reports Financial Results for the Quarter Ended June 30, 2010

  --  Net Investment Income for the quarter ended June 30, 2010 was $4.2
      million, or $0.19 per common share.
  --  Net Increase in Net Assets Resulting From Operations for the quarter
      ended June 30, 2010 was $5.4 million, or $0.24 per common share.

MCLEAN, Va., Aug. 2, 2010 (GLOBE NEWSWIRE) -- Gladstone Investment Corporation (Nasdaq:GAIN) (the "Company") today announced earnings for the first quarter ended June 30, 2010. All per share references are per basic and diluted weighted average common share outstanding, unless otherwise noted.

Net Investment Income for Quarter: Net Investment Income for the quarters ended June 30, 2010 and 2009 was $4.2 million, or $0.19 per common share, and $2.4 million, or $0.11 per common share, respectively, an increase in Net Investment Income of 72.1%, or 72.7% per common share. The increase in Net Investment Income was primarily driven by income recognized during the quarter ended June 30, 2010 from the sale of one of the Company's portfolio companies, A. Stucki Holding Corp. ("A. Stucki"), partially offset by lower interest income resulting from a reduction in the size of the Company's investment portfolio prior to March 31, 2010.

Net Increase (Decrease) in Net Assets Resulting from Operations for Quarter: Net Increase (Decrease) in Net Assets Resulting from Operations for the quarters ended June 30, 2010 and 2009 was $5.4 million, or $0.24 per common share, and ($9.2) million, or ($0.42) per common share, respectively. The increase in the Net Increase in Net Assets Resulting from Operations between the quarter ended June 30, 2010 and the prior year's quarter was primarily due to the net gain on the Company's investment portfolio. The Company recorded a net gain on investments of $1.2 million for the quarter ended June 30, 2010, compared to a net loss of $11.6 million for the prior year period, which was largely impacted by significant devaluations, primarily in the Company's equity holdings of its Control investments.

Estimated Fair Value: The aggregate investment portfolio depreciated during the quarter ended June 30, 2010, primarily due to the reversal of unrealized appreciation associated with the realized gain on the sale of A. Stucki. As of June 30, 2010, the entire portfolio was fair valued at 80.2% of cost, down from 90.9% as of March 31, 2010.

Net Asset Value: Net asset value was $8.86 per actual common share outstanding at June 30, 2010, as compared to $8.74 per actual common share outstanding at March 31, 2010.

Asset Characteristics: Total assets were $290.9 million at June 30, 2010, as compared to $297.2 million at March 31, 2010. At June 30, 2010, the Company had investments in 15 portfolio companies with an aggregate cost basis of $184.8 million and an aggregate fair value of $148.3 million. As of June 30, 2010, the Company's investment portfolio at fair value was comprised of 85.6% in debt securities and 14.4% in equity securities. Additionally, the Company held $119.3 million in cash and cash equivalents at June 30, 2010, including $75.0 million from a short-term loan.

Investment Yield: The annualized weighted average yield on the Company's portfolio, excluding cash and cash equivalents, was 10.3% for the quarter ended June 30, 2010, as compared to 10.0% for the quarter ended June 30, 2009. The weighted average yield varies from period to period based on the current stated interest rate on interest-bearing investments and the amounts of loans for which interest is not accruing. The increase in the weighted average yield for the quarter ended June 30, 2010 resulted primarily from the Company's sales of lower interest-bearing senior syndicated loans prior to March 31, 2010.

Highlights for Quarter: During the quarter ended June 30, 2010, the Company reported the following significant events:

  --  A. Stucki Holding Corp. Sale: In June 2010, the Company sold its equity
      investment and received full repayment of its debt investment in A.
      Stucki. The net cash proceeds to the Company from the sale of its equity
      in A. Stucki were $21.7 million, resulting in a realized gain of $17.0
      million. In connection with the equity sale, the company accrued and
      received cash dividend proceeds of $0.2 million from its preferred stock
      investment in A. Stucki. At the same time, the Company received $30.6
      million in repayment of its principal, accrued interest and success fees
      on the loans to A. Stucki. Additionally, immediately prior to the sale
      of A. Stucki, the Company received a special distribution of property
      with a fair value of $0.5 million, which was recorded as dividend income
      and is reflected as a new control investment, Gladstone Neville Corp.,
      on the Company's condensed consolidated schedule of investments as of
      June 30, 2010.
  --  Credit Facility 2-Year Renewal:  Entered into a third amended and
      restated credit agreement (the "Facility") providing for a $50.0 million
      revolving line of credit arranged by Branch Banking and Trust Company as
      administrative agent and Key Equipment Finance Inc. The Facility matures
      on April 13, 2012, and if it is not renewed or extended by that date,
      all unpaid principal and interest will be due and payable on or before
      April 13, 2013. Advances under the Credit Facility will generally bear
      interest at the 30 day LIBOR (subject to a minimum rate of 2.0%), plus
      4.5% per annum.
  --  Investment Activity: Funded approximately $0.8 million of additional
      investments to existing portfolio companies and received principal
      repayments of approximately $39.6 million, which included $38.7 million
      of unscheduled principal payments (of which $28.5 million related to the
      A. Stucki exit).
  --  Short Term Investment: Purchased $85.0 million of short-term U. S.
      Treasury securities on June 30, 2010 which matured on July 1, 2010.
  --  Distributions: Paid monthly distributions of $0.04 per share for each of
      April, May and June 2010.

Comments from President Dave Dullum: "The successful exit from our investment in A. Stucki not only produced significant realized returns, it also was the first liquidity event, since inception, consistent with our investment objectives and our business plan of generating capital gains to enhance the current income components through a combination of debt and equity investments. We believe our portfolio is sound with a good mix of investments. We are also encouraged by the increased activity in new deal opportunities and we are striving to find more good companies to add to our portfolio of investments."

Dividends Declared: Declared monthly cash distributions of $0.04 per common share for each of July, August and September 2010.

Summary Information: The following chart is a summary of some of the information reported above (in thousands of dollars, except per share data and percents):




                                 June 30, 2010          June 30, 2009
                              -------------------  ------------------------
  For quarter ended:
   Net Investment Income                 4,207                     2,445
   Results of Operation                  5,368                   (9,190)
   Average Yield on
    Portfolio                           10.31%                    10.01%
   Total dollars invested                  839                       650
   Total dollars repaid                 39,585                     6,725


                                 June 30, 2010          March 31, 2010
                              -------------------  ------------------------
  As of:
   Fair Value as a Percent
    of Cost                             80.20%                    90.88%
   Net Asset Value per share              8.86                      8.74
   Number of Investments                    15                        16
   Total Assets                        290,910                   297,161

Conference Call for Stockholders: The Company will hold a conference call Tuesday, August 3, 2010 at 8:30 am EDT. Please call (877) 407-8031 to enter the conference. An operator will monitor the call and set a queue for the questions. A replay of the conference call will be available through September 3, 2010. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 350972. The replay will be available approximately two hours after the call concludes.

The live audio broadcast of Gladstone Investment's quarterly conference call will be available online at GladstoneInvestment.com and investorcalendar.com. The event will be archived and available for replay on the Company's website through October 2, 2010.

Warning: The financial statements below are without footnotes, so readers should obtain and carefully review the Company's Form 10-Q for the quarter ended June 30, 2010, including the footnotes to the financial statements contained therein. The Company has filed the Form 10-Q today with the SEC, which can be retrieved from the SEC's website at sec.gov or from the Company's website at GladstoneInvestment.com. A paper copy can be obtained free of charge by writing to the Company at 1521 Westbranch Drive, Suite 200, McLean, VA 22102.

For further information contact Investor Relations at 703-287-5893.

The statements in this press release regarding the soundness and mix of the Company's portfolio, the Company's projected investment activities, the Company's ability to grow the portfolio and other such statements are "forward-looking statements." These forward-looking statements inherently involve certain risks and uncertainties, although they are based on the Company's current plans that are believed to be reasonable as of the date of this press release. Factors that may cause the Company's actual results to differ from these forward-looking statements include, among others, the duration and effects of current economic instability, the Company's ability to access debt and equity capital and those factors listed under the caption "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2010, as filed with the SEC on May 24, 2010 and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, as filed with the SEC on August 2, 2010. The risk factors set forth in the Annual Report on Form 10-K and Form 10-Q under the caption "Risk Factors" are specifically incorporated by reference into this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



            GLADSTONE INVESTMENT CORPORATION
     CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND
                       LIABILITIES
     (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE
                        AMOUNTS)
                       (UNAUDITED)

                                  June  30,  March 31,

                                     2010       2010
                                  ---------  ---------

  ASSETS
  Cash and cash equivalents       $ 119,318   $ 87,717
  Investments at fair value
   Non-Control/Non-Affiliate
    investments (Cost of $15,381
    and $22,674, respectively)       14,079     20,946
   Control investments (Cost of
    $122,954 and $152,166,
    respectively)                   101,574    148,248
   Affiliate investments (Cost
    of $46,501 and $52,727,
    respectively)                    32,676     37,664
                                  ---------  ---------
    Total investments (Cost of
     $184,836 and $227,567,
     respectively)                  148,329    206,858
  Interest receivable                   842      1,234
  Due from Custodian                 17,362        935
  Deferred financing fees               665         83
  Prepaid assets                        261        221

  Other assets                        4,133        113
                                  ---------  ---------

  TOTAL ASSETS                    $ 290,910  $ 297,161
                                  =========  =========

  LIABILITIES
  Borrowings at fair value
   Short-term loan (Cost of
    $75,000)                       $ 75,000   $ 75,000
   Line of credit (Cost of
    $16,500 and $27,800,
    respectively)                    16,500     27,812
                                  ---------  ---------
    Total borrowings (Cost of
     $91,500 and $102,800,
     respectively)                   91,500    102,812
  Accounts payable and accrued
   expenses                             401        206
  Fee due to Administrator              178        149
  Fees due to Adviser                 1,811        721

  Other liabilities                   1,314        295
                                  ---------  ---------

  TOTAL LIABILITIES                  95,204    104,183
                                  ---------  ---------

  NET ASSETS                      $ 195,706  $ 192,978
                                  =========  =========

  ANALYSIS OF NET ASSETS:
  Common stock, $0.001 par
   value, 100,000,000 shares
   authorized, 22,080,133 shares
   issued and outstanding at
   June 30, 2010 and March 31,
   2010                                $ 22       $ 22
  Capital in excess of par value    257,216    257,206
  Net unrealized depreciation of
   investment portfolio            (36,507)   (20,710)
  Net unrealized depreciation of
   derivatives                         (69)       (39)
  Net unrealized appreciation of
   borrowings                            --       (12)
  Accumulated net realized
   investment loss                 (24,956)   (43,489)
                                  ---------  ---------

  TOTAL NET ASSETS                $ 195,706  $ 192,978
                                  =========  =========


  NET ASSETS PER SHARE               $ 8.86     $ 8.74
                                  =========  =========

                GLADSTONE INVESTMENT CORPORATION
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
     (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                           (UNAUDITED)


                                          Three Months Ended
                                               June 30,
                                        ----------------------

                                           2010        2009
                                        ----------  ----------
  INVESTMENT INCOME
   Interest income
    Non-Control/Non-Affiliate
     investments                             $ 405     $ 1,112
    Control investments                      3,019       2.779
    Affiliate investments                    1,082       1.278

    Cash and cash equivalents                    1          --
                                        ----------  ----------
     Total interest income                   4,507       5,169

  Other income                               2,741          --
                                        ----------  ----------

     Total investment income                 7,248       5,169
                                        ----------  ----------

  EXPENSES
    Loan servicing fee                         824       1,068
    Base management fee                        200         313
    Incentive fee                            1,052          --
    Administration fee                         178         173
    Interest expense                           274         702
    Amortization of deferred financing
     fees                                      164         314
    Professional fees                          124         201
    Stockholder related costs                  104          82
    Insurance expense                           72          57
    Directors fees                              50          51

    Other expenses                             118          64
                                        ----------  ----------
     Expenses before credits from
      Adviser                                3,160       3,025

    Credits to fees from Adviser(1)          (119)       (301)
                                        ----------  ----------
     Total expenses net of credits to
      fees                                   3,041       2,724
                                        ----------  ----------


  NET INVESTMENT INCOME                      4,207       2,445
                                        ----------  ----------

  REALIZED AND UNREALIZED GAIN (LOSS)
   ON:
    Realized gain (loss) on sale of
     investments                            16,976    (34,605)
    Realized loss on termination of
     derivative                                 --        (53)
    Net unrealized appreciation of
     Non-Control/Non-Affiliate
     investments                               426      36,728
    Net unrealized depreciation of
     Control investments                  (17,461)    (11,481)
    Net unrealized appreciation
     (depreciation) of Affiliate
     investments                             1,237     (2,266)
    Net unrealized (depreciation)
     appreciation of derivatives              (29)          42
    Net unrealized depreciation of
     borrowings                                 12          --
                                        ----------  ----------
     Net gain (loss) on investments,
      derivatives and borrowings             1,161    (11,635)
                                        ----------  ----------

  NET INCREASE (DECREASE) IN NET
   ASSETS RESULTING FROM OPERATIONS        $ 5,368   $ (9,190)
                                        ==========  ==========

  NET INCREASE (DECREASE) IN NET
   ASSETS RESULTING FROM OPERATIONS
   PER COMMON SHARE:

     Basic and diluted                      $ 0.24    $ (0.42)
                                        ----------  ----------

  WEIGHTED AVERAGE SHARES OF COMMON
   STOCK OUTSTANDING:
     Basic and diluted weighted
      average shares                    22,080,133  22,080,133

                   GLADSTONE INVESTMENT CORPORATION
              CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS
   (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT DATA)
                              (UNAUDITED)

                                                 Three Months Ended
                                                      June 30,
                                               ----------------------

                                                  2010        2009
                                               ----------  ----------
  Per Share Data (1)
  Net asset value at beginning of period           $ 8.74      $ 9.73

  Income from investment operations
   Net investment income(2)                          0.19        0.11
   Realized gain (loss) on sale of
    investments(2)                                   0.77      (1.57)
   Net unrealized (depreciation) appreciation
    of investments(2)                              (0.72)        1.04
                                               ----------  ----------

    Total from investment operations                 0.24      (0.42)
                                               ----------  ----------

  Distributions from:

   Net investment income                           (0.12)      (0.12)
                                               ----------  ----------
    Total distributions(3)                         (0.12)      (0.12)


                                               ----------  ----------

  Net asset value at end of period                 $ 8.86      $ 9.19
                                               ==========  ==========

  Per share market value at beginning of
   period                                          $ 6.01      $ 3.82
  Per share market value at end of period            5.83        4.83
  Total return(4)                                 (0.99)%      35.24%
  Shares outstanding at end of period          22,080,133  22,080,133

  Statement of Assets and Liabilities Data:
  Net assets at end of period                   $ 195,706   $ 202,930
  Average net assets(5)                           193,094     210,188

  Senior Securities Data:
  Total borrowings                               $ 91,500   $ 111,940
  Asset coverage ratio(6)                            301%        280%
  Average coverage per unit(7)                    $ 3,006     $ 2,798

  Ratios/Supplemental Data:
  Ratio of expenses to average net assets(8),
   (9)                                              6.55%       5.76%
  Ratio of net expenses to average net
   assets(8), (10)                                   6.3%       5.18%
  Ratio of net investment income to average
   net assets(8)                                    8.71%       4.65%

  (1) Based on actual shares outstanding at the end of the
   corresponding period.
  (2) Based on weighted average basic per share data.
  (3) Distributions are determined based on taxable income calculated
   in accordance with income tax regulations which may differ from
   amounts determined under accounting principles generally accepted
   in the United States of America.
  (4) Total return equals the change in the market value of the
   Company's common stock from the beginning of the period, taking
   into account dividends reinvested in accordance with the terms of
   the Company's dividend reinvestment plan.
  (5) Calculated using the average of the balance of net assets at
   the end of each month of the reporting period.
  (6) As a business development company, the Company is generally
   required to maintain an asset coverage ratio of at least 200% of
   total consolidated assets, less all liabilities and indebtedness
   not represented by senior securities, to total borrowings and
   guaranty commitments.
  (7) Asset coverage per unit is the asset coverage ratio expressed
   in terms of dollar amounts per one thousand of indebtedness.
  (8) Amounts are annualized.
  (9) Ratio of expenses to average net assets is computed using
   expenses before credits from the Adviser.
  (10) Ratio of net expenses to average net assets is computed using
   total expenses net of credits to the management fee.
CONTACT:  Gladstone Investment Corporation
          Investor Relations
          703-287-5893